The Coal Trader

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EQUITIES

Coal Equity Research Coverage

Introduction

With few sell-side analysts left producing good research on the coal sector, we aim to be your one-stop source for independent coal equity research. None of us at TCT has worked directly as a sell-side analyst, but we’ve collectively worked on the buy-side, as investment consultants, mining engineers, geologists, commodities traders and even as musicians! We have several decades of combined expertise analyzing this sometimes-overlooked, but never boring sector.

Coverage

We are currently covering the following stocks, which are traded across US and Australian exchanges:

  1. Alpha Metallurgical Resources (AMR)
  2. Ramaco Resources (METC)
  3. Warrior Met Coal (HCC)
  4. Alliance Resource Partners (ARLP)
  5. Core Natural Resources (CNR)
  6. Corsa Coal (CSO.V)
  7. Peabody Energy (BTU)
  8. Morien Resources (MOX.V)
  9. Coronado Global Resources (CRN.AX)
  10. New Hope Group (NHC.AX)
  11. Whitehaven Resources (WHC.AX)
  12. Yancoal (YAL.AX)

We are constantly looking to expand our coverage, so please drop us a line and let us know the companies that most interest you.

Methodology

Because we know the coal industry, an increasingly rare skillset, The Coal Trader team can take a bottoms-up approach to evaluating coal equities. We begin with understanding the assets, the coal qualities and their costs, and build on top of that by assessing the following key factors:

  • Financial Statements: We delve into each company’s financial statements, including the income statement, balance sheet, and cash flow statement to assess the company’s revenues, expenses, profitability, debt levels, and cash flow patterns over time.
  • Key Ratios: We concentrate on enterprise value (EV) to free cash flow (FCF) as we believe this is the best approach to ascertaining “value” and normalize value across the peer group.
  • Industry Trends: We are always performing research on the coal sector to understand the competitive landscape, growth prospects, and challenges.
  • Competitive Positioning: Understanding each company’s competitive advantage is crucial in determining each company’s outlook and profitability pathways against one another. Moreover, as with any sector, product differentiation, market share and barriers to entry play an important role in the coal sector.
  • Management : Each company’s management team and track record are important gauges to keep in mind when investing in a cyclical industry like the coal. Shareholder value can be generated as well as squandered easily depending on management’s view on the outlook and where we are in the cycle.
  • Profitability: We assess each company’s profitability prospects by considering factors like market demand, product marketability, access to markets and logistics, and expansion plans.

After reviewing all of these factors, we make an investment assessment and provide either a hard price target or a range for where we believe shares will trade in the future.

Disclosures:

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