{"id":153,"date":"2014-07-01T05:09:03","date_gmt":"2014-07-01T05:09:03","guid":{"rendered":"http:\/\/bluegemresearch.co.za\/?p=153"},"modified":"2015-09-14T06:16:10","modified_gmt":"2015-09-14T06:16:10","slug":"wescoal-holdings-positives-dampened-by-eskom","status":"publish","type":"post","link":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?p=153","title":{"rendered":"Wescoal Holdings &#8211; FY 14 Results Note &#8211; Positives Dampened by Eskom"},"content":{"rendered":"<p><em><em>FY 14 Results Note \u2013\u00a0<\/em>Share Code: WSL\u00a0\u2013 Market Cap: R374m \u2013 PE: 12.9x \u2013 DY: 1.3%<\/em><\/p>\n<p><strong><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2014\/07\/Wescoal_Results-Note_FY-14.pdf\">Download the full Wescoal Holdings FY 14 Results Note<\/a><\/strong><\/p>\n<p><strong>FY 14 Results: Once-off Costs Create Earnings Miss<\/strong><\/p>\n<ul>\n<li>Wescoal reported its FY 14 results with revenue rising 70% to R1.1bn (FY 13: R0.7bn), largely driven by the H2:14 inclusion of the MacPhail acquisition into the Group\u2019s Coal Trading segment.<\/li>\n<li>Excluding the once-off profits on the sale of mineral assets during the period, the Group recorded an \u201cOperational\u201d EBITDA growth of 124% and HEPS rising to 15.7cps (FY 13: 12.4cps),<\/li>\n<li>While the Group\u2019s revenue slightly surpassed our forecast of R1.0bn, restructuring and relocation costs in the Coal Trading segment (R6m), intangibles amortisation (R2m), higher than expected costs and a more aggressive rehabilitation programme at Khanyisa and a general dip in Eskom-related volumes of coal collectively saw the Group miss our target HEPS of 21.2cps.<\/li>\n<\/ul>\n<p><strong>Our Thoughts: Uncontrollable Eskom and Spot Price Variables<\/strong><\/p>\n<ul>\n<li>The Group has identified mine extensions for Khanyisa and Intibane while Elandspruit is progressing well towards an expected first production during January 2015.<\/li>\n<li>MacPhail is integrating well into the Group\u2019s Coal Trading segment and the enlarged business\u2019s prospect look positive.<\/li>\n<li>Two key variables that will determine the Group\u2019s short-term prospects are (1) Eskom-related coal volumes, and (2) the Rand-price of inland coal. Both variables were soft during FY 14E and\u2014while hard to forecast\u2014indications point to upside here.<\/li>\n<\/ul>\n<p><strong>Forecast, Valuation and Implied Return: Relatively Flat Update<\/strong><\/p>\n<ul>\n<li>We lower our fair value by 5% to 240cps (previous: 253cps), as the time value of money has been offset by a lower spot coal price and slightly lower Eskom volumes.<\/li>\n<li>The implied PE of 15.3x is not very illustrative, though, as both Elandspruit and MacPhail are currently adding to our SOTP, but not yet (fully) contributing to the Group\u2019s profits.<\/li>\n<li>Based off this fair value, we marginally raise our 12m TP by 4% to 301cps (previous 12m TP: 287cps), implying a 48% return on an Exit PE of 12.2x (which still would not include a full year\u2019s steady-state contribution from Elandspruit).<\/li>\n<\/ul>\n<p><strong><a href=\"http:\/\/v5j22kvl0zh.c.updraftclone.com\/wp-content\/uploads\/2014\/07\/Wescoal_Results-Note_FY-14.pdf\">Download the full Wescoal Holdings FY 14 Results Note<\/a><\/strong><\/p>\n<p>What do you think of ARB Holding?\u00a0<a title=\"What do you think of ARB Holdings?\" href=\"mailto:info@bluegemresearch.co.za\" target=\"_blank\">Let us know&#8230;<\/a><\/p>\n<p><em>See our\u00a0<a title=\"Methodology\" href=\"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?page_id=9\" target=\"_blank\">methodology<\/a>\u00a0here and note our disclaimer\u00a0<a title=\"Disclaimer\" href=\"https:\/\/v5j22kvl0zh.c.updraftclone.com\/?page_id=17\" target=\"_blank\">here<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>FY 14 Results Note \u2013\u00a0Share Code: WSL\u00a0\u2013 Market Cap: R374m \u2013 PE: 12.9x \u2013 DY: 1.3% Download the full Wescoal Holdings FY 14 Results Note FY 14 Results: Once-off Costs Create Earnings Miss Wescoal reported its FY 14 results with revenue rising 70% to R1.1bn (FY 13: R0.7bn), largely driven by the H2:14 inclusion of [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[8,37,61,13,59,44,38,60,30,16,35,36,46],"class_list":["post-153","post","type-post","status-publish","format-standard","hentry","category-wescoal_jse","tag-blue-gem-research","tag-coal","tag-coal-research","tag-equity-research","tag-eskom-exxaro","tag-fundamental-analysis","tag-junior-miner","tag-research","tag-small-caps","tag-south-africa","tag-wescoal","tag-wescoal-holdings","tag-wsl"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/153","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=153"}],"version-history":[{"count":3,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/153\/revisions"}],"predecessor-version":[{"id":183,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=\/wp\/v2\/posts\/153\/revisions\/183"}],"wp:attachment":[{"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=153"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=153"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/v5j22kvl0zh.c.updraftclone.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=153"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}