ASX:CRN
Coronado Global Resources Inc
Investment Summary
The fund managers believe that Coronado Global Resources Inc. is the largest producer of metallurgical coal in Australia, with operations in both Australia and the USA. They emphasize that the company is among the lowest quartile cost producers globally, distinguishing itself from the controversial thermal coal sector. In their opinion, the recent dip in met-coal prices, which fell below production costs, presented a significant investment opportunity in a high-quality producer. They note that the outlook for metallurgical coal is bright, with coal futures expected to rise to $150 per tonne by 2021, supported by increasing global infrastructure spending. The managers express confidence that with solid capital management and an 80% dividend payout ratio, Coronado could be valued at $1.60 based on 2021 estimates. They argue that this investment opportunity highlights the value of thinking differently and embracing unconventional choices for potential significant returns.
Commentary From The Managers
Collins St Asset Management
30 Sept 2020
$0.91
- Collins St Asset Management updates their investment thesis on Coronado Global Resources Inc.
- Coronado is the largest producer of metallurgical coal in the Australian market.
- It operates sites in Australia and the USA, ranking among the lowest quartile cost producers globally.
- The company’s branding avoids directly mentioning coal due to misconceptions about coal types.
- Met-coal is distinct from thermal coal, used in steel production rather than energy generation.
- Despite concerns about owning shares in a coal company, Collins St Asset Management sees this as an investment opportunity.
- Recent price drops in met-coal presented a chance to invest in a top-tier producer.
- With coal futures projected at $150 per tonne by 2021, the industry's outlook appears promising.
- Solid capital management and an 80% dividend payout ratio support a valuation of up to $1.60 based on 2021 estimates.
- Increased global infrastructure spending offers long-term growth potential for Coronado's mining assets.
- This situation illustrates how unconventional thinking can uncover great investment opportunities.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.