Coronado Global Resources raised US$180m in new equity, thereby reducing gearing to around 23% from 41%. Additionally, banks have extended the debt covenant waivers to September 2021 from February 2021.
Morgans calculates these measures buy the company over 12 months of time at spot prices, after taking into account cash burn.
Meanwhile, improving coal market signals and the company’s leverage to the coal price is considered to be positive.
However, the broker notes the duration for which low coal prices persist is the key risk factor.
The Add rating is unchanged and the target price is decreased to $1.30 from $1.63.
Target price is $1.30.Current Price is $0.85. Difference: $0.45 – (brackets indicate current price is over target). If CRN meets the Morgans target it will return approximately 35% (excluding dividends, fees and charges – negative figures indicate an expected loss).