FBR Capital raised their price target on TECO Energy, Inc. (NYSE:TE), citing an improved metallurgical coal market.
"Following a review of the quarter, we are raising our price target for TE to reflect an improvement in the met coal market and the benefit of cash proceeds from the DECA II sale. However, as TE stock trades near or above $18/share, we believe that it increasingly reflects an acquisition premium for TE Coal. We support this view with a detailed analysis enclosed performed in collaboration with the FBR Coal Team. Our base case valuation for TECO Coal reflects an $820 million enterprise value that incorporates strong upward momentum in pricing, offset by cost escalation. TE stock looks fairly valued to us but becomes stretched as it reaches our price target using current market multiples," FBR said.
FBR said they're maintaining their "Market Perform" rating on TECO, while raising the price target from $17 to $18 a share. TECO closed on Friday at $17.59, gaining $0.26, or 1.50 percent.
Showing posts with label Metallurgical coal. Show all posts
Showing posts with label Metallurgical coal. Show all posts
Monday, November 1, 2010
Tuesday, October 19, 2010
Goldman's (NYSE:GS) Coal Favorites are Peabody (NYSE:BTU), Consol (NYSE:CNX)
Goldman Sachs (NYSE:GS) lowered its overall rating on the coal sector to "Neutral," saying their favorite in the segment is Peabody Energy (NYSE:BTU), which they retain a "Buy" on, and Consol Energy (NYSE:CNX), which also kept their "Buy" rating from Goldman on them.
In their report, Goldman said, "We see 13 percent upside to our target prices and believe a neutral coverage view is more appropriate."
Alpha Natural Resources (NYSE:ANR) had its rating slashed to "Neutral" by Goldman, while Massey Energy (NYSE:MEE), Arch Coal (NYSE:ACI) and Walter Industries (NYSE:WLT) all had "Neutral" ratings maintained on them.
The latter three were kept "Neutral," according to Goldman, until individual issues related to each company become clearer.
Goldman's preference for Peabody was based on its "organic growth options," and Console because of its "attractive low-cost asset mix and upcoming catalysts," according to the report.
The benchmark metallurgical coal estimate for 2012 was increased to $193 a metric done by Goldman, up from the prior projection of $175.
In their report, Goldman said, "We see 13 percent upside to our target prices and believe a neutral coverage view is more appropriate."
Alpha Natural Resources (NYSE:ANR) had its rating slashed to "Neutral" by Goldman, while Massey Energy (NYSE:MEE), Arch Coal (NYSE:ACI) and Walter Industries (NYSE:WLT) all had "Neutral" ratings maintained on them.
The latter three were kept "Neutral," according to Goldman, until individual issues related to each company become clearer.
Goldman's preference for Peabody was based on its "organic growth options," and Console because of its "attractive low-cost asset mix and upcoming catalysts," according to the report.
The benchmark metallurgical coal estimate for 2012 was increased to $193 a metric done by Goldman, up from the prior projection of $175.
Cliffs' (NYSE:CLF) Empire Mine May Extend Past 2014
In a visit with Cliffs Natural Resources' management recently, FBR Capital said, among other things, that the life of the Empire mine may be extended past 2014.
FBR said, "Last week we visited Cliffs Natural Resources' management and came up with the impression that (a) management remains committed to its met coal business; (b) North American iron ore pricing should be finalized in 4Q10 and not in 3Q10; (c) about 80% of Asia Pacific iron ore business has now moved to spot-based pricing from quarterly contracts; and (d) there is a possibility of extending the mine life at Empire mine beyond the current 2014 planned closure."
FBR also raised its earnings per share estimates for the full year 2010, while lowering EPS for the third quarter of 2010.
"This morning we are increasing our 2010 EPS/EBITDA estimates to $7.40/$1,805 million from $7.08/$1,725 million, but are lowering our 3Q10 EPS/EBITDA estimates to $2.47/$572 million from $2.73/$619 million, primarily to reflect the delay in finalizing North American iron ore prices and about 9% higher 4Q10 iron ore prices in Asia Pacific, where about 80% of sales are now spot based and 20% quarterly contract based," said FBR.
Cliffs closed Monday at $66.17, dropping $1.37, or 2.03 percent. FBR has a price target of $81 on them.
FBR said, "Last week we visited Cliffs Natural Resources' management and came up with the impression that (a) management remains committed to its met coal business; (b) North American iron ore pricing should be finalized in 4Q10 and not in 3Q10; (c) about 80% of Asia Pacific iron ore business has now moved to spot-based pricing from quarterly contracts; and (d) there is a possibility of extending the mine life at Empire mine beyond the current 2014 planned closure."
FBR also raised its earnings per share estimates for the full year 2010, while lowering EPS for the third quarter of 2010.
"This morning we are increasing our 2010 EPS/EBITDA estimates to $7.40/$1,805 million from $7.08/$1,725 million, but are lowering our 3Q10 EPS/EBITDA estimates to $2.47/$572 million from $2.73/$619 million, primarily to reflect the delay in finalizing North American iron ore prices and about 9% higher 4Q10 iron ore prices in Asia Pacific, where about 80% of sales are now spot based and 20% quarterly contract based," said FBR.
Cliffs closed Monday at $66.17, dropping $1.37, or 2.03 percent. FBR has a price target of $81 on them.
Tuesday, August 17, 2010
Puda (AMEX:PUDA) Files Registration Following Powerful Quarter
Puda Coal, Inc. (AMEX:PUDA), a consolidator of coal mines in China, as well as producer of clean metallurgical coal, has filed a registration with the U.S. Securities and Exchange Commission Tuesday in order to be able to sell any combination of Common Stock, Preferred Stock, Warrants and Units for up to $90 million.
Earnings for Puda in the last quarter were $0.36 a share, while the street was looking for $0.24 a share. Revenue came in at $82 million.
Sales of clean coal in the quarter rose to 601,000 metric tons, a 36.5 percent gain over last year in the same quarter. The average selling price of the coal increased to $137 a metric ton, up 25.7 percent over last year.
Gross margins almost doubled for 7.5 percent last year to 14.7 percent this year.
Profits grew to $12.1 million, soaring 235.2 percent.
Earnings for Puda in the last quarter were $0.36 a share, while the street was looking for $0.24 a share. Revenue came in at $82 million.
Sales of clean coal in the quarter rose to 601,000 metric tons, a 36.5 percent gain over last year in the same quarter. The average selling price of the coal increased to $137 a metric ton, up 25.7 percent over last year.
Gross margins almost doubled for 7.5 percent last year to 14.7 percent this year.
Profits grew to $12.1 million, soaring 235.2 percent.
Wednesday, April 21, 2010
Massey Energy (NYSE:MEE) Taking Charge in Second Quarter on Upper Big Branch Accident
Massey Energy (NYSE:MEE) said in the second quarter the company will take a charge from the explosion at its Upper Big Branch mine which killed 29 workers.
With metallurgical coal being a prime product and the loss of production at the Upper Big Branch mine, Chief Executive Officer Don Blankenship said they'll make up for that by increasing production at all operating metallurgical coal mines by increasing the work week to six days and adding adding three continuous miner sections at Elk Run mines, which is close to Upper Big Branch.
"Financial results for the second quarter 2010 will include a charge related to the tragic accident at the Upper Big Branch mine," said Blankenship.
"While Massey anticipates further analysis will be required, the company estimates the range of loss to be $80 million to $150 million for charges related to the benefits being provided to the families of the fallen miners, costs associated with the rescue and recovery efforts, insurance deductibles, possible legal and other contingencies."
First quarter results exceeded analysts expectations, as net income was $33.6 million, or 39 cents a share, whereas analysts had been looking for 27 cents a share. Last year during the same quarter net income was $43.4 million, or 51 cents a share.
With metallurgical coal being a prime product and the loss of production at the Upper Big Branch mine, Chief Executive Officer Don Blankenship said they'll make up for that by increasing production at all operating metallurgical coal mines by increasing the work week to six days and adding adding three continuous miner sections at Elk Run mines, which is close to Upper Big Branch.
"Financial results for the second quarter 2010 will include a charge related to the tragic accident at the Upper Big Branch mine," said Blankenship.
"While Massey anticipates further analysis will be required, the company estimates the range of loss to be $80 million to $150 million for charges related to the benefits being provided to the families of the fallen miners, costs associated with the rescue and recovery efforts, insurance deductibles, possible legal and other contingencies."
First quarter results exceeded analysts expectations, as net income was $33.6 million, or 39 cents a share, whereas analysts had been looking for 27 cents a share. Last year during the same quarter net income was $43.4 million, or 51 cents a share.
Tuesday, April 20, 2010
Teck Resources (NYSE:TCK) Profits Surge
Teck Resources (NYSE:TCK) enjoyed fantastic earnings as first-quarter profits exploded by over three times what they did last year at the same time, as an increase in copper prices drove the earnings of the company up.
Net revenue at the company grew by C$908 million ($909.7 million), or C$1.53 a share from C$241 million, or 50 cents, last year. Overall sales increased to C$1.9 billion, or 14 percent.
After one-time charges, earnings were 35 cents a share, down from the analysts expectations of 49 cents a share.
The company earnings grew with the price of copper as mentioned, as copper prices on average on the London Metal Exchange doubled to $7,273.56 a metric ton, based largely on the increasing demand from China, whose economy grew at a hefty 11.9 percent rate in the same quarter.
Don Lindsay, President and CEO said in a statement today, “Our operating results reflect strong copper prices, but do not yet reflect the substantial increases in steel-making coal prices that have been negotiated.”
While most people think of Teck primarily as a copper-producing company, after the acquisition of Fording Canadian Coal Trust, which produces metallurgical coal for steel producers, coal now accounts for 46 percent of the C$7.67 billion of 2009 revenue for the company.
Assuming Lindsay's assertion is correct about coal not being factored into the earnings, we could see some great upside for Teck over the next couple of years.
Net revenue at the company grew by C$908 million ($909.7 million), or C$1.53 a share from C$241 million, or 50 cents, last year. Overall sales increased to C$1.9 billion, or 14 percent.
After one-time charges, earnings were 35 cents a share, down from the analysts expectations of 49 cents a share.
The company earnings grew with the price of copper as mentioned, as copper prices on average on the London Metal Exchange doubled to $7,273.56 a metric ton, based largely on the increasing demand from China, whose economy grew at a hefty 11.9 percent rate in the same quarter.
Don Lindsay, President and CEO said in a statement today, “Our operating results reflect strong copper prices, but do not yet reflect the substantial increases in steel-making coal prices that have been negotiated.”
While most people think of Teck primarily as a copper-producing company, after the acquisition of Fording Canadian Coal Trust, which produces metallurgical coal for steel producers, coal now accounts for 46 percent of the C$7.67 billion of 2009 revenue for the company.
Assuming Lindsay's assertion is correct about coal not being factored into the earnings, we could see some great upside for Teck over the next couple of years.
Saturday, April 10, 2010
Macarthur Coal (ASE:MCC), Arch Coal (NYSE:ACI) Will Profit from Metallurgical Coal Demand from China
Macarthur Coal (ASE:MCC) and Arch Coal (NYSE:ACI) stand to benefit strongly from the demand from China for metallurgical coal, a high-quality coal which isn't readily available in China.
While resisting the changes in the duration of iron ore contracts from Vale (NYSE:VALE), BHP Billiton (ASE:BHP) and Rio Tinto (ASE:RTP), where China wants a longer contract period than that changed from a yearly to a quarterly basis recently.
They have made a deal for long-term contracts for metallurgical coal with a few coal producers, which stands now at above $200 a ton.
It seems the Chinese will attempt to use those contracts and the move to invest in more domestic iron ore production to get the large iron ore producers to bring back longer contracts.
Most other countries have agreed to the shorter contracts, making this an interesting dilemna for all involved. Because China buys the most iron ore, they feel they should get a discounted price in comparison to other countries and companies.
While resisting the changes in the duration of iron ore contracts from Vale (NYSE:VALE), BHP Billiton (ASE:BHP) and Rio Tinto (ASE:RTP), where China wants a longer contract period than that changed from a yearly to a quarterly basis recently.
They have made a deal for long-term contracts for metallurgical coal with a few coal producers, which stands now at above $200 a ton.
It seems the Chinese will attempt to use those contracts and the move to invest in more domestic iron ore production to get the large iron ore producers to bring back longer contracts.
Most other countries have agreed to the shorter contracts, making this an interesting dilemna for all involved. Because China buys the most iron ore, they feel they should get a discounted price in comparison to other countries and companies.
Coal Prices Up On Massey (NYSE:MEE) Mine Explosion
Coal prices soar after Massey mine explosion
The explosion at a Massey Energy (NYSE:MEE) mine has caused the price of metallurgical coal to increase as a tight coal market will continue to struggle with the loss of coal supply.
Now that the final four miners' bodies have been found, bringing the total loss of life to 29, it becomes the worst mining accident since 1970.
It'll take months to find the cause behind the explosions, and that will drag on the coal market for some time.
Metallurgical coal is a higher quality product, and demand is high for it, especially in Asia.
Estimates for the Upper Big Branch mine was to ship about 1.6 million tons of metallurgical coal in 2010, about 3 percent of all production in the U.S., based on numbers from 2009.
Even with increased production at other mines, Massey said it's doubtful they're be able to replace what the Upper Big Branch mine would have produced.
With spot prices already increasing by 22 percent, steelmakers will be under pressure, determined by whether or not they'll have to eat the higher prices and have their margins fall, or they are able to pass them on to their customers.
The explosion at a Massey Energy (NYSE:MEE) mine has caused the price of metallurgical coal to increase as a tight coal market will continue to struggle with the loss of coal supply.
Now that the final four miners' bodies have been found, bringing the total loss of life to 29, it becomes the worst mining accident since 1970.
It'll take months to find the cause behind the explosions, and that will drag on the coal market for some time.
Metallurgical coal is a higher quality product, and demand is high for it, especially in Asia.
Estimates for the Upper Big Branch mine was to ship about 1.6 million tons of metallurgical coal in 2010, about 3 percent of all production in the U.S., based on numbers from 2009.
Even with increased production at other mines, Massey said it's doubtful they're be able to replace what the Upper Big Branch mine would have produced.
With spot prices already increasing by 22 percent, steelmakers will be under pressure, determined by whether or not they'll have to eat the higher prices and have their margins fall, or they are able to pass them on to their customers.
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