New Hope’s Share Price Treads Water after $1 Billion Wipeout

At time of writing, Australian-based coal miner New Hope Corporation Ltd [ASX:NHC] is staying afloat at $3.25 a share (up 1.72%) after a cool $1 billion was wiped from their portfolio.

New Hope’s overall value has slumped over a quarter since the beginning of the week.

Why have New Hope’s share price lost so much ground?

It’s widely speculated that the wipeout is a result of panic selling after the Chinese pushback on Australian coal.

Australian miners have felt the heat during the last few months due to China’s rapid crackdown on coal imports, citing serious ‘environmental grounds’ and policy changes.

But New Hope’s management team resolutely deny that this is a serious problem for the company.

Nothing has fundamentally changed at New Hope. It’s got to be the negative view the market has of China,’ said asset manager Tom Millner.

It’s an overreaction by the market. The market looks at China and it reacts — if forgets we can still ship coal to Taiwan, Korea and Japan.

While that may be so, Millner was also forced to point out that New Hope’s half-year FY19 results (released on Tuesday) were 5–10% below previous market expectations, showing ‘less cash, higher costs, and a lower dividend than expected.

What’s future look like for New Hope?

Although not a complete disaster, the restrictions on Australian coal has simply added more difficulty to an already competitive environment.

And even if the crackdown from China is solely based on environmental concerns, or something more politically underhanded — the company’s record revenue results still indicate that they are firmly set against the likes of similar Australian coal miners.

It’s loosely expected that coal restrictions will ease later in the year; until then, it might be the ideal time for anxious investors to sit back and watch the market trends a little while longer.


Ryan Clarkson-Ledward,

For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

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