We’ve had questions on CRN over recent months but for subscribers that missed our thoughts, we see excellent medium-term value with $2.5bn CRN which is trading on an Est. 4.4x earnings for FY23. Following comments in Q2 MM believes the miner is looking for acquisitions with some of BHP’s coal assets likely to be under consideration. Companies such as BHP are transitioning to a green company profile as fast as possible but by definition, this is likely to offer some excellent opportunities for companies such as CRN who are prepared to operate in the unpopular space for longer.
Unlike Whitehaven (WHC) and New Hope (NHC), Coronado isn’t yet a cash cow of dividends preferring to conserve cash to grow balance sheet flexibility and explore M&A interest for met coal mines (Australia and US). We like this medium-term approach plus US giant Peabody Energy (BTU) might again show interest in the company although it may need a change of direction by the QLD government – in November 2022 when BTU ended talks in late 2022 the stock was trading above $2, or over 30% above yesterdays close.
- One of the core views at MM is the transition to green energy will be more expensive and take longer than many believe which should prove a tailwind for stocks like CRN.
MM is bullish toward CRN around $1.50
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