There will be some very happy shareholders in New Hope Corporation - especially its major holder - Washington H Soul Pattinson after the NSW and Queensland coal miner lifted total dividend payout for 2017-18 by 40%.
The FY19 result revealed materially softer coal prices in the second half. Delays at Acland continue. The project still requires the mining and water licence to proceed and no further insight was provided.
Back in late 2011 Citi stopped covering New Hope Corp, leaving with a Buy recommendation and $6.10 price target. Circumstances since have obviously changed a lot. Today, Citi re-appears with a Neutral rating and $2.55 price target.
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.
State regulators continue to hold up the approval process for New Hope’s Acland Stage 3 expansion. The broker now assumes a longer period of lower production expectation, and suggests the market will continue to apply a discount for political risk.