New Hope Guides to Strong First-Half Result, Bengalla Production Tracking to Expectations

We increase our fair value estimate for no-moat New Hope by 5% to AUD 3.00 per share following the release of its January 2022 quarter activities report. New Hope released unaudited year-to-date underlying EBITDA of AUD 552 million, well above the AUD 81 million reported in the previous corresponding period. Thermal coal prices have surged and currently sit around USD 250 per tonne, well above February 2021 levels which were around USD 80 per tonne. We have increased our fiscal 2022 EBITDA forecast by 16% to AUD 1 billion having adjusted our model for the stronger than expected first-half result. Our longer-term outlook remains unchanged, we assume long-term demand for New Hope’s thermal coal is underpinned by the economic development of economies throughout Asia. We forecast a nominal midcycle coal price of USD 79 per tonne in 2025. Shares in New Hope currently screen at a 11% discount to our revised fair value estimate.