Bigtincan Holdings Broker Ratings
18th June 2024
Bowen Coking Coal Analyst Rates a Buy After Q1 Report
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Code: BCB | Market Cap: $238m | Current Price: $0.11
Price Target: $0.27 | Sector: Materials | Broker: Shaw & Partners
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Bowen Coking Coal Overview
Bowen Coking Coal (ASX:BCB) focuses on exploring and developing metallurgical coal in Australia. The company holds 100% interest in the Isaac River Project, the Cooroorah Project, and the Comet Ridge Project. The company also has a 90% interest in the Hillalong Coking Coal Project, which covers 48 square kilometres in the northern Bowen Basin.
September Quarterly Highlights
During the September quarter, Bowen shipped 555,000 tonnes of coal and generated $120 million in revenue. The average achieved coal prices for both thermal and metallurgical coal sales declined, with thermal prices down 21% to US$84 per tonne and metallurgical prices down 28% to US$173 per tonne. However, the shift in sales mix to metallurgical coal (54%) partially offset the weaker prices. The overall achieved coal price was down 15% to US$132 per tonne (~A$203 per tonne).
Overall cash costs were A$199/t per tonne of coal sold, with the Burton Complex operating at A$152/t and Bluff at A$372/t. The Bluff mine is not profitable at current coal prices and has been placed on care and maintenance.
Bowen has finished the quarter with $44million in cash, and on our current forecasts is likely to finish the December quarter with about A$60m with operating cash flow funding a further ~A$30m development capital at Ellensfield South.
Recommendation
Shaw & Partners retain a BUY recommendation, dropping their price target back slightly to 27c (from 29c). They have a positive view on coal markets and Bowen has a clear pathway to positive cash flow. The brokers forecast that Bowens will finish the December quarter with $60 million of operating cash flow, which will support funding for a $30 million development of capital at Ellensfield South. Their EBITDA forecasts for FY24/25/26 are for a reduction of 11%/7%/12% on higher costs.
If you would like a full copy of the report – reach out to us at newsletter@equityespresso.com.au
