The Whitehaven Coal Ltd (ASX: WHC) share price has climbed 4.2 per cent to $3.69 today despite the coal miner releasing no specific news to the market. Over the past year the shares have nearly doubled in value thanks to rebounding coal prices.
The rising coal price has been attributed to falling supplies globally as miners were hesitant to invest in coal production given a prolonged period of coal price weakness in prior years.
For the full year ending June 30 2017, Whitehave posted a record net profit of $405.4 million, yet still only has a market value around $3.6 billion, which is less than 9x its trailing profit. In other words if coal prices keep rising it has potential to deliver another record profit in FY 2018 and look cheap on its current valuation.
The miner also proposes to pay a dividend of 20 cents per share to investors if the motion is approved at the company's annual general meeting.
The principal thorn in Whitehaven's side are its $311 million net debt load and the potential for coal prices to reverse course as dramatically as they have soared over the past 18 months. As such its shares could be volatile in the 12 months ahead.
