New Hope Group Ltd (ASX:NHC) is a majority Australian owned and operated diversified energy company, which is mainly based in South East Queensland. New Hope has business interests and operations spanning coal mining, exploration, port operation, oil, agriculture, innovative technologies and investment. New Hope has a market capitalisation of A$2.1 billion.

What are the FY19 results from New Hope?

Today (Tuesday 17 September 2019) New Hope released its FY19 annual results. The main points are as follows:

  • Revenue for FY19 is A$1,306 million, up 21 per cent from FY18.
  • Profit after tax before non-regular items for FY19 is A$268.4 million, up 3 per cent from FY18.
  • Earnings per share before non-regular items for FY19 is 32.3 cents, up 3 per cent from FY19.
  • Final dividend for FY19 is 224.3 cents (fully franked), up 2 per cent from FY18.

Specific results on main company operations are as follows:

  • New Acland Coal mine produced 4.1 million tonnes of coal for the year, down 8 per cent from FY18.
  • West Moreton Operations produced 0.7 million tonnes of saleable coal in FY19, this volume was in line with FY18.
  • Queensland Bulk Handling exported 6.7 million tonnes of coal, down 7 per cent from FY18.
  • Bengalla Joint Venture produced 9.3 million tonnes of coal in FY19, in line with FY18.

What were the drivers of this result?

The main driver behind this result is the increase in New Hope share of the Bengalla mine (which increased from 40 per cent to 80 per cent during the year) and produced 6.0 million tonnes.

New hope produced 10.9 million tonnes of saleable coal in FY19, which is a 21 per cent increase from FY18. This large increase in the amount of coal sold was the major factors for the strong increase in revenue for FY19.

What is the outlook for New Hope?

New Hope management notes, “Queensland operations are set to record lower production volumes in the year ahead with Acland production constrained to mining remnant coal from Stage 2 operations in the absence of receiving Stage 3 approvals while the Jeebropilly mine will cease mining operations in December 2019 once all economically viable reserves have been extracted.”

Additionally, “Work will continue on the Company’s development assets at Burton, Lenton and the North Surat, with the Burton coking coal project being the most prospective short-term development opportunity.”

Finally, investors can expect thermal coal markets to remain volatile moving into the future. However, New Hope considers that the demand for high quality thermal coal remains strong across major Asian economies notwithstanding concerns over climate change.

What is the market reaction?

The initial market reaction to New Hope FY19 is slightly negative. New Hope share price is down around 2 per cent and is currently trading at around A$2.46 (10.30am, 17 September). New Hope trades at a P/E ratio in the mid-teens and a dividend yield of around 5 per cent (fully franked).

 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

September 18, 2019