Whitehaven Coal in a Singapore sling

Good morning,

With reporting season (practically) in the rear mirror, it’s time for companies to strut their stuff with investors.

One name with a good story to tell is Whitehaven Coal. The $5.5 billion ASX-listed coal miner had a bumper year, declaring a 37 per cent increase in net profit to $2.7 billion and adding to its already substantial cash pile, up 156 per cent to $2.65 billion.

Now, off they go to Singapore, as they do every year, to parade the result to shareholders. One sticking point, however, is whether Whitehaven will end up splashing out on one of or both BHP’s Queensland coking coal mines. The miner is considered one of the frontrunners in the multi-billion dollar race for Daunia and Blackwater in a sales process run by Macquarie Capital.

But London hedge fund Bell Rock Capital Management is dead set against the acquisition, and would prefer the company return cash to shareholders rather than spend it on growth. And several brokers are uneasy. Bank of America noted “potential M&A risk” last week, while Jefferies expects “any M&A to be scrutinised, creating a challenging hurdle to deliver an accretive transaction”. “While we are not opposed to an asset acquisition, as always, it will come down to price,” Barrenjoey said.

Whitehaven’s shares dipped 5 per cent following the result. Four analysts downgraded the company, citing the suspension of the share buyback and cost-capex blowouts.

Whitehaven would not confirm whether Whitehaven had bid for the BHP assets, but noted it would fit with his long-held strategy to increase the company’s exposure to coking coal.

In other reporting season news, it’s been quite the arrival for Viburnum Funds in EML. The Perth-based activist investor popped up as a substantial in the downtrodden payments company just two weeks ago, sliding in at 5.41 per cent. This morning, the stock rocketed 32 per cent (despite declaring a $284 million loss) on its cleanup efforts. Not bad for Viburnum, joining Alta Fox quietly biding away its time on the register.

And spotted: BofAboss Joe Fayyad and BofA COO (and keen marathoner) Jim Barrett-Lennard having lunch at banker-hive District Brasserie in Sydney’s CBD on Tuesday.

Happy reading,

Financials shared with potential backers said Nidohad grown from just $17.8 million revenue in 2020 to $88.8 million.

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