Whitehaven Coal Ltd (ASX: WHC) shares fell significantly last week after the company released half-year FY26 results.
The softer result was largely due to lower coal prices, which weighed on earnings.
The company reported an average coal price of $189 per tonne, down 19%.
It also reported a $69 million statutory profit for H1 FY26, with a fully franked interim dividend of 4 cents per share declared.
Whitehaven Coal shares fell 7.3% late last week following the release.
Its share price is now down 18% since the start of February.
Following the release, Bell Potter released updated guidance on Whitehaven Coal shares.
Here's what the broker had to say.
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QLD costs revised higher
Whitehaven Coal is a large Australian based coal producer.
The company produces metallurgical coal (~50% of group production) from two assets located in the Queensland Bowen Basin (Blackwater and Daunia), and thermal coal (~50% of group production) from four assets located in the New South Wales Gunnedah Basin (Maules Creek, Narrabri, Tarrawonga and Vickery Early Mining).
Bell Potter said that Whitehaven has increased its expected average mining costs for FY24–FY28 at Blackwater and Daunia to about A$140–145 per tonne.
That's roughly $20–25 higher than what it expected when it bought the assets. The increase is mainly due to inflation and operational factors.
However, the company has identified ways to improve costs, such as:
- Better use of draglines at Blackwater
- Improved autonomous haulage system (AHS) productivity at Daunia
The broker also warned permanent cost impacts include higher labour (i.e. same job same pay laws) and demurrage costs.
EPS changes in this report are: -1% in FY26; -2% in FY27; and -3% in FY28.
Hold recommendation from Bell Potter
Based on this guidance, Bell Potter has upgraded its recommendation to a hold (previously sell).
However, the broker has lowered its price target to $8.10 (previously $8.40).
Yesterday, Whitehaven Coal shares closed at $7.81.
Bell Potter's updated price target indicates 3.7% upside.
In the medium term, WHC are positioned to capitalise when coal markets sustainably improve with a diversified portfolio of assets in Queensland and New South Wales and strong organic growth optionality. We have a positive long term met coal outlook, driven by constrained supply and increased demand from steel producers reliant on seaborne met coal (i.e. India).
Elsewhere, Ord Minnett recently put a share price target of $9.90 on Whitehaven Coal shares.
It's worth noting this target was released before the recent half-year earnings.
