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Are ASX coal mining shares good value right now?


The ASX coal mining shares have had a disappointing start to the year.

New Hope Corporation Limited (ASX: NHC) shares closed 2.01% lower at $1.95 per share on Friday and has fallen again in morning trade today to $1.90 per share. It’s a similar story for the Whitehaven Coal Ltd (ASX: WHC) share price, which sunk 1.63% to $2.42 per share on Friday and has continued to slide today, down another 2.07% at the time of writing.

With both shares hitting new 52-week lows, are these recent declines a sign of overselling from investors or will the Aussie miners continue to sink lower in 2020?

Why ASX coal mining shares are being hammered right now

It’s been a tough few months for Aussie coal stocks with concerns regarding oversupply and sinking demand in the industry. As Indian group Adani looks to ramp up its operations in the Galilee Basin, it has raised questions about what the coal price will look like in coming years.

We’ve also seen earnings soften in recent times, which has put the ASX coal mining shares under pressure. 

The devastating bushfire season that is sweeping across Australia has also thrust the climate change debate back into the spotlight. And in amongst it all, the world’s largest asset manager announced it would divest its thermal coal assets going forward.

BlackRock’s announcement has put further pressure on ASX coal mining shares as the asset manager redeploys its $7 billion in funds under management.

Is there hope for shareholders in 2020?

Whenever you combine popular issues with heavy media coverage, there’s always the chance for overselling in the markets.

That could be the case with both New Hope and Whitehaven shares which are trading at 52-week lows.

However, it’s also true that significant structural change could be about to hit the industry. Whether that’s government regulation or simply the impact of Adani, it looks like this could be a decade of change.

At this stage, I’m not sure whether the ASX coal mining shares are good value, or if this is the start of a more sustained decline. I’ll be watching these 2 S&P/ASX 200 (INDEXASX: XJO) companies closely when they report their earnings in February.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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