WHC -14%: A very poor quarterly update this morning from WHC both in absolute terms plus importantly relative to market expectations. Leading into this update we’ve seen a consistent string of broker upgrades, Goldman Sachs upped it to $2.20 price target , Bell Potter to $2.35, and Morgan Stanley to a bullish $2.60, in other words, the market had become universally bullish WHC as coal prices rallied and WHC management did a good job of talking up the stock with a marketing push around town.
But alas, today’s update was weak both operationally and in terms of realised pricing for coal, and the hit to the share price is warranted in MM’s view.
What next? Although this update is not WHC’s finest hour there are some constructive takeaways – especially focussed on the companies key asset (Maules Creek surface mine) and coal price tailwinds. However, cracks appear when we look at their operation in Narrabri. All up we conclude that coal price tailwinds will offset operational headwinds, however this is going to be a FY22 story – patience will now be required.
MM remains bullish – just!
Add To Hit List
