New Hope Corp Ltd (ASX: NHC) shares fell more than 6% yesterday along with many other mining stocks.
Despite this fall, New Hope shares remain up 22% this year.
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Why did New Hope shares fall yesterday?
It seems investors were reacting to two important issues yesterday.
Firstly, the company released its half-year results.
Some key results included:
- A 20.1% decline in revenue to $814.4 million
- 84% decline in net profit after tax to $54.3 million – influenced by a 20.4% decline in its average realised selling price, its exposure to increased prime overburden movement, and lower non-regular gains.
- A reduced fully franked interim dividend to 10 cents per share (from 19 cents per share a year ago).
Secondly, investor sentiment may be changing due to renewed attention to Australia's energy policy and transition.
As The Motley Fool's Aaron Teboneras reported yesterday, debate continues over Australia's energy transition and the role coal will play in the country's future power mix.
However New Hope Chief Executive Rob Bishop believes it may take time before renewables can fully replace coal.
He argues this is evident right now, as recent geopolitical tensions have reminded policymakers about the importance of reliable power.
What did Bell Potter have to say?
Following yesterday's earnings results, Bell Potter released updated guidance on New Hope shares.
The broker said underlying EBITDA and statutory NPAT came in below its expectations.
Speaking on the Middle East conflict, the broker said it has raised energy security concerns and driven higher prices across the energy commodity complex.
The spot thermal coal price is US$132/t, up 23% compared with the December 2025 quarter average (US$108/t).
The broker said any further impact to global LNG supply should support thermal coal demand and prices.
On the investor call, management noted it is monitoring risks to diesel supply and pricing, with around ~20% of NHC's cost base exposed to the fuel. We expect any increase in NHC's cost base to be offset by higher realised prices.
We have increased our realised prices in the current quarter and raised our D&A assumption across FY26-27. EPS changes in this report are: -22% in FY26; -5% in FY27; and unchanged in FY28.
Hold recommendation
Based on this guidance, the broker placed a hold recommendation on New Hope shares (previously sell).
The broker now has a price target of $4.50 (prev. A$4.10) on the company.
However, from yesterday's closing price of $4.96, this indicates a downside of 9%.
NHC's low-cost operations will continue to underpin margins through the coal price cycle, funding capital expenditure commitments and supporting shareholder returns. Beyond ramp-up of New Acland Stage 3, we see a limited organic production growth pipeline and believe NHC may participate in industry consolidation.
