Morgans describes Newcrest Mining’s FY20 result as steady, but says Lihir’s outlook disappointed and questions whether Lihir will ever post a consistent performance. FY21 guidance for Lihir points to both an unexpected drop in grade and mill recoveries, explains the broker.
Strength in the gold price, a generally weaker Australian dollar and a late surge in copper prices, helped to offset a mixed year in volume terms for the overall company, according to Morgans.
FY20 earnings (EBITDA) were 8% ahead of estimates by the analyst, while the underlying NPAT of US$750m allowed for a final dividend of US$0.17. This exceeded the Morgans forecast dividend of US$0.10.
The broker maintains a Hold rating and expects ongoing strength in gold prices to support an improved earnings outlook. The target price is increased to $34.30 from $31.46.
Target price is $34.30.Current Price is $33.83. Difference: $0.47 – (brackets indicate current price is over target). If NCM meets the Morgans target it will return approximately 1% (excluding dividends, fees and charges – negative figures indicate an expected loss).