The New Hope Corporation Ltd (ASX: NHC) share price is in the spotlight after the ASX coal miner reported its FY24 first-half result.
HY24 highlights
This was for the six months to 31 January 2024.
- Realised coal price down 58% to A$197 per tonne
- Total revenue down 46% to $857 million
- Underlying EBITDA dropped 59% to $424.8 million
- Operating cashflow down 87% to $131 million
- Net profit after tax (NPAT) fell 62% to $252 million
- Ordinary dividend per share down 32% to $0.21
- Special dividend down 64% to $0.09 per share
Operationally, New Hope did what it could to affect the result – saleable coal production was 4.1mt, an increase of 28% year on year, with the first coal sold from New Acland stage 3 during the period.
‘Free on rail’ cash costs, excluding New Acland while it was ramping up, was $68.1 per tonne, an increase of 4%. New Hope said its costs were “supported by disciplined management of controllable costs.”
As a resource business, the company’s profit is heavily impacted by increases or decreases in the resource price. Energy prices have dropped back compared to the prior corresponding period when there was a rise following the invasion of Ukraine and the fallout for Russian energy.
Project progress
Projects could have a major influence on the New Hope share price in the future.
At its Bengalla mine, its 13.4mt per year growth project is “tracking ahead of schedule” – New Hope is expecting to see unit costs decline as production increases in the second half of FY24.
During the half, the ASX coal miner acquired the West Muswellbrook assessment lease and progressed exploration work at the exploration lease area, EL9431. Both of these are to the west of Bengalla which can provide synergies to its mining and agricultural assets, as well as “long-term optionality”.
New Hope also recently increased its ownership of Malabar Resources, which increases its exposure to metallurgical coal and will “provide attractive returns to shareholders over the coming decades.”
Final thoughts on New Hope shares
At the current New Hope share price, the ordinary dividend ($0.21) and special dividend ($0.09) together equate to a fully franked dividend yield of 6.6%, or 9.5% including the franking credits.
The New Hope share price hasn’t been this low since 2022, but it’s very hard to know if today is a good price or not because it depends on what happens with the coal price.
I don’t want to directly own a coal miner, as I don’t see a long-term growth outlook for the energy/thermal coal sector with the shift to other energy sources. It has a low price/earnings ratio (p/e ratio), but I’d rather look elsewhere.
