New Hope’s (ASX.NHC) fiscal 2026 adjusted NPAT of $162 million, or $0.19 per share, fell 60% on last year, driven by a 10% decline in realized coal prices and higher unit costs that offset higher volumes. Despite this, shares rose 3% as the market cheered a higher-than-expected $0.30 final dividend.

Why it matters: Net profit was 35% weaker than expected, primarily due to higher unit cash costs and depreciation. Unit costs excluding royalties of $89 per metric ton are 8% higher than last year, driven by a temporarily higher strip ratio at Bengalla and elevated diesel prices due to the Iran war.

  • No formal guidance was provided, and we make minor changes to our forecasts. We expect higher thermal coal volumes over the next few years as mine production at New Ackland ramps up.

The bottom line: Our $6.20 per share fair value estimate for no-moat New Hope stands. Shares are trading close to our intrinsic assessment. The balance sheet remains strong, with net cash of roughly $390 million at the end of July 2026.

Big picture: In the short term, we expect concerns over LNG availability to support thermal coal demand and prices as countries, especially in Southeast Asia, are pushed toward alternative energy sources. Supply cuts from Indonesia, the world’s largest thermal coal exporter, are also bullish.

  • Longer term, demand for high-energy, low-ash coal is likely to remain resilient. It helps countries provide reliable baseload power to their populations while helping them meet emission reduction obligations under international treaties.
  • Thermal coal supply is also likely to be constrained by ESG and regulatory pressures. For example, New South Wales, a major source of high-quality coal, has banned new coal mines. This should benefit existing producers such as New Hope and no-moat Whitehaven.

New Hope’s fair value estimate maintained; shares trade close to our intrinsic assessment

New Hope offers exposure to global energy demand via increasing thermal coal production at a time when many other miners are winding down or selling their thermal coal assets. The strategy relies on demand for high-quality thermal coal remaining robust longer-term.

The purchase of a further 40% interest in the Bengalla coal mine in New South Wales in 2018 took its ownership of Bengalla to 80% after the company purchased its initial 40% stake in 2016. Along with the development of New Acland Stage 3, this sees New Hope reliant on thermal coal. We forecast equity sales of thermal coal to rise to about 13 million metric tons from fiscal 2029, up from roughly 11.8 million in fiscal 2026, driven by the ramp up of New Acland Stage 3.

Asia will likely remain the relative bright spot for demand for the generally higher-quality (high energy, low ash) thermal coal produced by New Hope, driven by the region’s fleet of young, high energy low emission coal-fired power stations. Both Bengalla and New Hope remain in or around the lowest quartile of the thermal coal cost curve. As such, we think companies higher up the cost curve that produce lower-quality coal are more likely to be affected by likely falling demand for thermal coal in coming decades.

As a commodity producer, New Hope is a price taker and needs low-cost mines with long lives and a low installed capital base to support persistent longer-term excess returns. We assign it a no-moat rating. While we forecast midcycle ROIC moderately above its WACC, the difference is too small to consider it moatworthy.

The firm has substantial additional resources elsewhere in Queensland and a 26% stake in Malabar Resources, which owns the Maxwell metallurgical coal mine in New South Wales. The mine commenced production in 2023 and likely has a mine life of more than two decades, with unit costs in the bottom quartile of the industry cost curve. It provides modest diversification into metallurgical coal.

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