Has Whitehaven just sent a shiver down the spines of coal investors?
Nick Sundich, April 12, 2023
Whitehaven Coal (ASX:WHC) is one of several ASX coal stocks that have enjoyed a stellar run in the past couple of years. The company’s shares are up over 700% since September 2020. The key catalyst has been surging coal prices, driven by energy shortages resulting from the Russia-Ukraine war, consequently boosting the profits of coal companies, such as Whitehaven.
It also has helped that coal stocks have hardly put a foot wrong – until now.
Whitehaven Coal (ASX:WHC) share price chart, log scale (Source: TradingView)
Whitehaven updates its guidance
9 days ahead of its quarterly production report, Whitehaven updated its guidance for FY23. It warned labour shortages and other operational constraints were impacting production. Although the company expectes things to improve in the June quarter, some sales volumes would be pushed into FY24.
As a consequence, Whitehaven is expecting 18-19.2Mt production, down from 19.0-20.4Mt before. It is expecting to sell 15.3-16Mt, down from 16.5-18Mt previously. The unit cost of coal (excluding royalties) would be $100$107/t, up from $95-$102/t.
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Hardly doomsday, but perhaps the end of the bull run
Whitehaven still told its shareholders that it would be a good quarter. It expects to report a $2.7bn net cash position and $1.2bn in cash from operations. And coal prices remain high, with an averages sales price of ~$400/t.
But this morning’s announcement illustrates that dream runs cannot last forever. The stock was down more than 7% in early morning trading, but has recovered some of the lost ground during the day.
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