@Hands
how funny, I had just sat down at my computer to write a forum post on coal stocks, including CRN, and here you are doing the same. Intriguingly, no one seems to have brought this company up before.
it trades on some pretty funky numbers:
PE ~3
Div yield ~12-13% (If annualised. Currently unfranked, likely franked next year) They quote 23% in their presentation but that is using historical SP.
Net cash position.
Goal to return profits to shareholders.
Looking at a "share buyback" (senior notes)
It is important to note that CRN is a nearly exclusive Metallurgical coking coal producer, not a thermal coal producer. This has a number of implications:
- thermal coal price is heading north due to the energy crunch, and probably going to get even higher over winter given Russian coal has just been sanctioned. CRN may be able to alter the constituents of its metallurgical coal to more closely resemble thermal coal to take advantage of this dynamic.
- Thermal coal is "bad" from an ESG POV and has increased risks related to this going forward (see forum post)
- Metallurgical coal is used to make steel. Steel production is correlated with world economic growth - not looking great currently
- But, it is also correlated with infrastructure spending, which might be looking up significantly as governments look to boost economic activity in the face of a worldwide recession (China in particular, if they can get out of the COVID hole they have dug for themselves)
- CRN is heavily exposed to India with 25% of their shipments heading there. There is real hope that India has finally managed to hit its stride and will achieve a sustainable GDP growth rate of high single digits for the next decade. This will need a lot of steel. This recent economist podcast delves further into this topic if you are interested.
Interested in others perspectives on whether this looks like a value trap or just an anomaly due to it being a dirty coal stock.
DISC held IRL
