CRN SHARE PRICE SITUATION
Brokers seem positive on CRN. Why?
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Answer
Hi Colin,
CRN is a $1.675bn international producer of metallurgical (coking) coal, primarily used in steelmaking. In 2023 the company enjoyed ~59% of its revenue from Australia with the balance coming from its US operations.
- Of the 10 analysts shown on the MM site indeed there are 3 Holds, 6 Buys and 1 Strong Buy, yet the stock keeps falling – MM also owns CRN in our Emerging Companies Portfolio.
The big issue with CRN is the coal price which is also dragging down the likes of Whitehaven (WHC) and New Hope (NHC) which we also hold across different portfolios. Our belief is the transition to clean energy will be slower than planned/hoped which ultimately will push the price of fossil fuels higher but that hasn’t eventuated through 2024 primarily due to the lacklustre Chinese economy. Until the coal price stabilises/turns, CRN will be hard work for investors.
- We only hold a 3% exposure to CRN due to contrarian nature of the play, but we do believe it will improve in 2025, hopefully sooner rather than later! The major factor in broker calls we suspect is valuation.
