Morgan Stanley considers the regional skills shortage at Maules Creek is of concern as contract labour costs could affect costs into FY21.
Maules Creek run-of-mine production has been downgraded to 10-11mt because of stoppages from dust events, because of water shortages, and labour shortages.
Meanwhile, the Vickery regulatory decision is delayed, which does not affect fundamentals in the broker’s view. Morgan Stanley downgrades FY20 estimates for earnings per share by -20%.
Overweight rating, Attractive industry view and $4.80 target maintained.
Target price is $4.80.Current Price is $2.62. Difference: $2.18 – (brackets indicate current price is over target). If WHC meets the Morgan Stanley target it will return approximately 45% (excluding dividends, fees and charges – negative figures indicate an expected loss).