Coal miners hit as Bell Potter revises expected earnings
A big dip in forecast coal prices has seen Bell Potter cut earnings expectations for miners by as much as a third.
Broking and advisory firm Bell Potter has cut the earnings outlooks of some of Australia’s coal miners by as much as a third after significant revisions to its coal price forecasts.
Analysts at Bell Potter said in a note to clients on Friday that they now expected prices for coking coal to average $US165 and $US163 a tonne in financial 2020 and 2021 respectively, down from previous forecasts of $US188 and $US178 a tonne.
Thermal coal projections were also trimmed back, falling to $US70 a tonne in both financial 2020 and 2021; down from $US85 and $US75 a tonne respectively.
The revised estimates are still higher than current spot prices, with coking coal currently trading at $US155 a tonne and thermal coal fetching just $US63 a tonne.
The Bell Potter team said coal prices had been hurt by a host of factors.
“Coal prices have been impacted by: the slowing global economy and the uncertainty caused by the US-China trade tensions; falling steel producer margins; port restrictions in China on coal imports from Australia; increased coal supply from China, Indonesia, Russia and Australia; and the weak prices of substitute energy products (gas),” Bell Potter analysts said.
“Despite this raft of headwinds, the longer-term fundamentals of these markets remain positive: persistent demand growth and constrained supply.”
But the lower forecasts triggered a host of projected earnings revisions across a number of coal producers.
Whitehaven Coal was the hardest hit, with Bell Potter carving 35 per cent off its forecast 2020 earnings per share and 28 per cent off its 2021 estimate.
Coronado Coal’s forecast earnings per share dropped 10 per cent for 2019 and 26 per cent for 2020, while Stanford’s forecast financial 2020 earnings fell 14 per cent.
Bell Potter’s target prices for both Coronado and Whitehaven were also cut. The firm now has a target price of $3.90 a share for Coronado, down from $4.50 previously, while its target for Whitehaven has been trimmed from $4.80 to $4.50.
Coronado was trading down 1.09 per cent at $2.73 in early afternoon trade while Whitehaven was up 2.5 per cent to $3.275.
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