In today’s briefing:
- Whitehaven Coal – 35% of Mkt Cap Cash/ Aggressive Capital Allocation The Key
- OZ Minerals (OZL AU): Scheme Meeting on 13 April
- OZL Scheme Booklet Posted – 60 Days to Completion
Whitehaven Coal – 35% of Mkt Cap Cash/ Aggressive Capital Allocation The Key
- Whitehaven Coal (WHC AU) underwhelming capital allocation in H1 2023 may have disappointed investors, but armed with a war chest of 2.47 bn AUD (35% mkt cap), we remain optimistic.
- The company aims to purchase 240 mn shares ( or about 25% of outstanding shares ) over and above the 10% it completed from last year’s buyback phase.
- Trading at 2.2x/3.2x FY23e/FY24e, the stock is extremely cheap with a conservative dividend yield of 9.1%/6.3% FY23e/FY24e ( assuming a 20% dividend-only payout ratio).
OZ Minerals (OZL AU): Scheme Meeting on 13 April
- The IE considers BHP Group Ltd (BHP AU)’s A$28.25 offer for OZ Minerals Ltd (OZL AU) to be fair and reasonable as it is within its valuation range of A$27.37-30.47.
- Copper prices and peers’ share prices have risen since the deal announcement. The IFA address perky copper prices by using reasonable long-term copper prices to value the assets.
- This is done with no hint of a competing bid. At last close price and for the 2 May payment, the gross and annualised spread is 0.9% and 6.1%, respectively.
OZL Scheme Booklet Posted – 60 Days to Completion
- On 2 March, the Court approved the distribution of the OZ Minerals Ltd (OZL AU) Scheme Booklet, which was posted on 3 March 2023. The Scheme Meeting is 13 April 2023.
- The Independent Expert has concluded the Scheme is Fair and Reasonable and in the best interests of OZL shareholders. Directors unanimously support.
- This deal is almost certainly done. The IE report is, as is often the case, enormously informative. Watch the franking credit timing. Not a lot of spread left here.
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