The December quarter was soft, Credit Suisse observes, amid weak manganese prices. The main change to estimates is driven by an expected effective tax rate of 75-85% in the first half. There are no available tax benefits to use from South Africa Energy Coal.
Upon returning from a company organised Illawarra site visit, Citi analysts note that while coal quality is first class, costs and sustaining capital are high. The fixed cost base is high, the analysts emphasise.
Deutsche Bank upgrades to Buy from Hold and raises the target to $4.10 from $3.80. The broker believes the easy gains have been made and FY19 is likely to feature challenges to price rises from increasing costs and capital expenditure. Still, earnings remains satisfactory.