Credit Suisse assesses the March quarter update highlights weak demand amid capacity closures and depressed pricing. The pain for Coronado Global is reflected in the elevated net debt as working capital movements go against the company.
The broker does not believe there are any covenant concerns at present and warns against crystallising losses at current levels, given the long-life assets and leverage to prices once markets turn.
Outperform maintained. Target is reduced to $2.80 from $3.30.
Target price is $2.80.Current Price is $1.25. Difference: $1.55 – (brackets indicate current price is over target). If CRN meets the Credit Suisse target it will return approximately 55% (excluding dividends, fees and charges – negative figures indicate an expected loss).