The New Hope Corporation Limited (ASX: NHC) share price is up 5% after reporting big profit growth in the first half FY23.
New Hope is one of the largest coal miners in Australia.
New Hope HY23 result
Here are some of the highlights from the ASX coal share for the six months to 31 January 2023:
- Total tonnes sold decreased by 34% to 3.4 million tonnes
- The realised sale price increased by 143% to $467.4 per tonne
- Total revenue went up by 54% to $1.58 billion
- Underlying EBITDA (EBITDA explained) jumped 87% to $1.04 billion
- Net profit after tax (NPAT) grew 103% to $669 million
- Operating cashflow increased 117% to $983 million
New Hope explained that the record underlying EBITDA was achieved despite “significant rain events”.
Site cash costs per sold tonne increased due to weather-related disruptions which impacted volume mined.
New Hope was pleased that its cash generation remains strong, with a focus on capital management initiatives to strengthen its balance sheet. But, while improving its cash pile – which grew by 255% over the six months to $971 million at 31 January 2023 – it’s also paying large dividends.
HY23 dividends
New Hope declared an ordinary dividend of $0.30 per share, the same as the prior corresponding period.
But, it also declared a special dividend of $0.10 per share.
The total payout of $0.40 per share was up 33% compared to the $0.30 per share last year. Stronger dividends can help the New Hope share price as investors look for cash payouts.
What will the coal miner use its cash for?
The business is planning to use some of its money for the New Acland Stage 3 and the Bengalla life of mine increase.
It also suggested there could be acquisition opportunities that are aligned to its strategy.
New Hope also said future uses of money will include dividends, share buybacks, the buy-back of the remaining convertible notes and other capital returns.
Outlook for the New Hope share price
New Hope suggested that increased demand and supply disruptions have boosted the coal price, while under-investment in thermal coal will “support prices moving forward”.
The ASX coal share also said that demand is outstripping supply, with future growth expected from south east Asia.
The company also noted that coal’s share of energy generation globally “continues to grow”.
It continues to be among the lowest-costing coal producer, which gives it “resilience to demand decline from decarbonisation.”
The business is also examining opportunities to repurpose its assets and transform its business at the end of the mine life. At Malabar, studies continue to investigate the opportunity for large scale solar generation.
With the New Hope share price up around 80% over the past year, it certainly isn’t as cheap as it was. Is it good value? It depends on how high coal prices stay, for how long. It may still be cheap, but investing in coal miners is not exactly fashionable these days.
