WHC Chart, page-657

More than a bit puzzling how Morningstar can rate WHC as SELL with a FAIR VALUE of $1.00

Nothing wrong with wanting to call it as a sell but fair value at a $1, leave me alone guys...


ANZ Share Investing | Online Share Trading
"We maintain our AUD 1.00 per share fair value estimate for Whitehaven Coal. The shares remain overvalued with the rapid rise in coal prices likely to unwind as China loosens restrictions on mining and economic stimulus from 2016 wanes. The spot coking coal price has fallen to around USD 160 per tonne from above USD 300 per tonne in late 2016. Excessive market optimism and likely coal price falls are the key catalysts for the share price to retrace. We maintain our no-moat rating. Assets are long-life, but lack a cost advantage. High financial and operating leverage, coupled with cyclicality, drive our very high fair value uncertainty rating. The first-half result was largely telegraphed by the recent second-quarter production report. Net profit increased to AUD 158 million from AUD 8 million a year ago with higher coal prices and further volume growth from Maules Creek, which brings a greater proportion of higher-value coking coal. We expect second-half profit to further rise to AUD 247 million reflecting the high contracted coal prices already locked in for the March quarter, settled late last year near the height of euphoria. Unit costs are likely to modestly rise in the second half as Whitehaven temporarily accelerates production to recover from the first half’s disruptions. We have raised our full-year coal sales and cost forecasts marginally. Profits should moderate quite quickly from fiscal 2019 as coal prices and economic activity in China normalise. The balance sheet has strengthened considerably with net debt of AUD 628 million down from AUD 925 million a year ago. Somewhat surprisingly, the company didn’t pay an interim dividend despite the rapid balance sheet improvement. Management will re-evaluate the potential for dividends at the end of the year. We halve our full-year dividend forecast to AUD 0.05 per share but with another year of windfall profits likely, the emphasis on shareholder returns is likely to grow in fiscal 2018."