Commodity prices diverged in the quarter. Despite solid China steel production, iron ore and metallurgical coal prices are down, while copper rose on supply issues and hopes of faster global growth. However, prices are elevated compared with history and cost-curve support.
WHC is trading within a range we consider fairly valued.
Price
A$7.77
Fair Value
A$9.30
Uncertainty
Very High
1-Star Price
A$37.66
5-Star Price
A$9.44
Economic Moat
Wsfq
Capital Allocation
Wchpyktc
Bulls Say, Bears Say
Bulls
Existing coal producers, particularly those like Whitehaven that produce high-energy, high-quality coal, may benefit from future supply potentially being dampened as new coal mines face more difficulties gaining approval.
Bears
The company's return on invested capital is likely to be depressed in the long term.
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Whitehaven Coal is a large Australian independent thermal and semisoft metallurgical coal miner with mines in the Gunnedah Basin, New South Wales. It also bought Blackwater and Daunia, two coking coal mines in Queensland, from BHP and Mitsubishi in April 2024. In addition, it owns the large Vickery and Winchester South deposits in New South Wales and Queensland, respectively. Coal is railed to ports in Newcastle and Queensland for export to Asian customers. Along with expanded production at Maules Creek and Narrabri, we expect its share of salable coal production to approach 36 million metric tons from fiscal 2028, from about 13 million in fiscal 2023. Development of Vickery could see around 7 million metric tons of extra equity production, with first output likely in 2024 or 2025.