Coal is the most despised asset in the world. Investors don’t want to touch it, banks won’t lend to it, insurers won’t cover it and everyone is sure miners are on the path to extinction. When the very thought of investing in the sector makes your stomach churn, you’re probably onto a good thing.
Back in October 2020, we believed Whitehaven was one of the cheapest big stocks on the ASX. Trading at just 30% of book value, the company’s Maules Creek mine – its largest asset – was worth $2 a share, twice its share price at the time.
Capable of producing 20 million tonnes of coal a year, Whitehaven, in 2019, generated operating cash flow of $800 million and a net profit of $500 million. It also paid $300 million in dividends. Back then, coal prices were slightly above long-term averages and Whitehaven looked scandalously cheap.
The company produces some of the best quality coals in the market and gets a premium to benchmark prices. As we said in 2019, when Whitehaven joined our buy list at a price of 98 cents, “If coal prices recover, it could move explosively as profits and production both rise.”
So it has proved. Printing cash is a cliché that is often used and is often wrong. Yet no other term adequately describes what is happening in the coal sector as underinvestment joins soaring demand to drive sensational prices.
Diese Geschichte stammt aus der September 2022-Ausgabe von Money Magazine Australia.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent ? Anmelden
Diese Geschichte stammt aus der September 2022-Ausgabe von Money Magazine Australia.
Starten Sie Ihre 7-tägige kostenlose Testversion von Magzter GOLD, um auf Tausende kuratierte Premium-Storys sowie über 8.000 Zeitschriften und Zeitungen zuzugreifen.
Bereits Abonnent? Anmelden
Is the public market shrinking?
Australia needs a healthy stock market to give companies access to funds and to allow retail investors to build wealth.
India: three steps to transformation
Massive investment and extensive reforms turbocharge the economy.
The ballet of business
Changing direction, products, models and marketing is a hard task for a business. We chart what it takes to turn a business around, plus profile four successful pivots.
Save money and the planet
Could the high cost of living give us the incentive we need to reduce how much water and energy we use or waste? These eco-friendly household tips will help you do just that.
AI adoption is the new black
Artificial intelligence is set to reshape the commercial world, and small enterprises can’t afford to miss the boat.
Spam attack! Murky laws jam our inboxes
Unwanted marketing material is one of the pain points of modern life.
From rags to riches in style
Rich Tran sported a bowl cut until he was 14 years old and had no intention of becoming a hairdresser.
New work deals are killing the 'old' office
The Covid pandemic and the subsequent lockdowns accelerated the trend to more people working from home. It was a mixed experience.
Points taken: the truth about rewards
Can hopping between credit cards really boost your frequent flyer haul and give you cheap or free travel - or is it doing more harm than good behind the scenes? Money puts it to the test.
Shortcuts to own a home
Innovative ideas with a focus on low costs and sustainability could help solve the housing crunch.