Whitehaven shares jump as market welcomes sell down
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More news: The Whitehaven share price jumped more than 5% during Thursday's session after announcing the 30% selldown of Blackwater to two Japanese steel mills with long-term offtake agreements in place.
Citi analysts said the sale came in line with their discount cash flow valuation and was unlikely to encounter any regulatory hurdles.
They said capex guidance was in line with their own estimates but that Whitehaven's projected costs of $140 to $155 per tonne was higher than Citi had previously forecast.
They retained a share price target of $8.90, well up from the $7.60 shares were trading at around lunch time.
What they said: "We think this is a better price than the market has anticipated and the market will now be focussing on renewed capital management initiatives by Whitehaven," Citi wrote in a note on Thursday.
Whitehaven reports profit slump, divests Blackwater stake
The news: Whitehaven Coal announced the sale of 30% of its Blackwater coal mine to Japan's two largest steelmakers Nippon Steel and JFE Steel for USD1.08 billion ($1.6 billion), as the coal miner reported a sharp drop in full-year profit.
The numbers: Whitehaven recorded full-year statutory net profit of $355 million, down 87% on the previous year, and short of consensus estimates of $767.3 million, according to Visible Alpha data.
Revenue fell 37% to $3.8 billion, while EBITDA reduced 80% to $798 million, as the average realised coal price from NSW operations more than halved to $217 per tonne.
The coal miner declared a final dividend of 13 cents per share, beating average forecasts of 8 cents, but down from 42 cents a year ago.
The context: Whitehaven said it forecasts a structural shortfall in global metallurgical coal production — due to long-term production constraints of hard coking coal from Australian producers, combined with increased seaborne demand from India — to drive higher metallurgical coal prices over the near and long-term.
The company described FY24 as a "pivotal year" which saw the group acquire BHP's Daunia and Blackwater metallurgical coal mines in Queensland. Its divestment of Blackwater, expected to complete in early 2025, will see the mine owned by Whitehaven, Nippon Steel and JFE Steel in an unincorporated joint venture, managed by Whitehaven. The companies have also entered into a separate offtake agreement.
What they said: Whitehaven CEO and managing director Paul Flynn said on the Blackwater divestment: "The formation of this joint venture with such high quality participants validates the asset purchase by Whitehaven, the coal quality and Whitehaven's plans as the operator of Blackwater".
"The proceeds from the sell down with further strengthen Whitehaven's balance sheet, providing enhanced flexibility as we assess the range of competing opportunities for capital in line with our capital allocation framework," he said.
The sources: ASX announcement, ASX announcement
