The New Hope Corporation Ltd (ASX: NHC) share price is under the spotlight after reporting its HY25 result.
New Hope is one of the largest coal miners in Australia. It operates the Bengalla mine in NSW and the New Acland mine in southeast Queensland. It also has port, oil and gas, and agricultural operations.
HY25 result
Below are some of the highlights from the six months to 31 January 2025:
- Saleable coal production increased 32.9% to 5.4mt
- Free on rail (FOR) cash costs of $55.5 per tonne, down 23.5%
- Underlying EBITDA rose 21.8% to $517.3 million
- Net profit after tax (NPAT) increased 35.2% to $340.3 million
- Operating cashflow grew 143% to $316.9 million
- Dividend per share increased by 11.8% to $0.19
- Share buyback of up to $100 million
New Hope explained that its coal production growth increased thanks to the “continued execution” of its organic growth plans.
The coal miner said the continued ramp-up of the New Acland mine delivered the further lift in coal production. New Hope also said the conclusion of the Oakey Coal Action Alliance’s legal challenge “provides certainty for the community and a clear runway to reach production of ~5mt” per year by developing the Manning Vale West mining area.
The cash costs per tonne reduced because of increased coal production (spreading costs across more tonnes) and disciplined cost control. This was important because there was a reduction of the coal price during the period.
During the half, the company also increased its ownership of Malabar Resources to 22.97%, “further growing exposure to high-quality metallurgical coal in alignment with the company’s strategy of investing in low-cost coal assets with long-life approvals.” It bought an additional 3% stake in Malabar for $2 per share.
New Hope share buyback
The coal miner said its leadership believes the miner’s current share price “does not accurately reflect the underlying value of the company’s assets”, so it’s launching the buyback.
The buyback gives the company an opportunity to “enhance the remaining value of the company’s assets.”
It will help the company’s return on equity, earnings per share (EPS) and dividend per share, according to New Hope.
Outlook for the New Hope share price
The company said it remains focused on ramping up production at the New Acland mine and sustaining increased production at the Bengalla mine.
For shareholders, I think the most pleasing aspect of the update was the increased dividend and the share buyback. This will help increase the value of each remaining share, and the dividend payment is large. Today’s announced payment alone is a dividend yield of 7% including the franking credits.
I don’t think coal miners have an extraordinary future ahead with the long-term phase-out of coal as part of the energy mix, but it is a lot cheaper after dropping 20% since late January 2025. But, I’m not surprised it has jumped 5% this morning due to the shareholder returns. Ignoring the environmental aspects (which are significant for plenty of investors), it may be a shorter-term turnaround idea, but I wouldn’t commit to a 20-year investment unless it diversified further away from energy coal. There are other ASX dividend shares I’d rather buy.
