First half revenue and underlying earnings (EBITDA) were around $30-40m ahead of Morgans forecasts, driven by higher than expected realised prices and a cost reduction at Bengalla. The 4 cent dividend was also considered a surprise, supported by a strong 2H outlook.
In relation to NSW flooding, the broker notes there will be a deferral of sales/cash flow as exports are halted though cash flow impacts are likely to be offset by higher prices.
Add rating and target increases to $1.70 from $1.60. Morgans considers the company is conservatively valued on the 80% owned Bengalla’s cash flows only while hard assets and growth options are still for free.
Sector: Energy.
Target price is $1.70.Current Price is $1.35. Difference: $0.35 – (brackets indicate current price is over target). If NHC meets the Morgans target it will return approximately 21% (excluding dividends, fees and charges – negative figures indicate an expected loss).
