First-half results missed expectations because of costs. Credit Suisse suspects investors are concerned that the syndicated loan the company has acquired is a signal for lower capital returns going forward.
The company has entered into a $600m secured loan facility to fund future growth projects. The broker was disappointed with the operating performance as unit costs increased in Queensland because of reduced feed available to wash plant and decreased yields.
New South Wales operations were also disappointing in terms of costs, affected by elevated fuel costs and increased repair & maintenance.
Credit Suisse downgrades to Neutral from Outperform, given the strong rally in the share price. Target is $4.
Target price is $4.00.Current Price is $3.69. Difference: $0.31 – (brackets indicate current price is over target). If NHC meets the Credit Suisse target it will return approximately 8% (excluding dividends, fees and charges – negative figures indicate an expected loss).