ASX:CRN
Coronado Global Resources Inc
Investment Summary
The fund managers believe that Coronado Global Resources Inc. presents a compelling investment opportunity, particularly due to its position as the largest producer of metallurgical coal in Australia, a crucial component in steel production. While coal is often viewed negatively, the managers emphasize that met-coal is distinct from thermal coal, which is associated with environmental concerns. The fund managers view recent price dips as a buying opportunity, believing that Coronado's solid capital management and strong market position should lead to significant long-term growth. With a forecasted price target of $1.60, they are optimistic about its future, driven by global infrastructure spending and the company's competitive advantages in the met-coal market.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Manager
Collins St Asset Management
Date
30 Sept 2020
Price
$0.91
Medium
Quarterly Report
Commentary
Collins St Value Fund initiated a position in Coronado Global Resources Inc. because it sees significant value in the company, despite the discomfort that often comes with investing in coal. As the largest producer of metallurgical coal in Australia and one of the world’s lowest-cost producers, Coronado operates mines in both Australia and the USA. Unlike thermal coal, which is associated with environmental concerns, metallurgical coal is a key ingredient in steel production, not energy generation, and should not be viewed in the same negative light. The Fund saw an opportunity when met-coal prices recently dipped below the cost of production and below iron ore prices, making Coronado undervalued. The Fund believes that with solid capital management, an 80% dividend payout ratio, and favorable industry conditions, Coronado is poised to benefit from global infrastructure spending and rising met-coal prices. With forecasts suggesting prices could reach $150 per tonne by 2021, the Fund estimates the company could be worth as much as $1.60 per share. Collins St Value Fund sees this as a unique and misunderstood opportunity, highlighting the importance of looking beyond the obvious to uncover potential in out-of-favor sectors.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.