Investment summary

Continental Coal recently released upbeat semi-annual operating and financial results, posting its maiden positive EBITDA and after-tax profit. In the six months to December 2011, the company saw a 112% y-o-y increase in ROM coal output, with export coal sales skyrocketing 380% and revenue rising 284% to A$49.9m. Along with the stellar top-line performance, the company showed stringent cost control, which supported positive EBITDA of A$3.0m compared to a A$28.5m loss in H110. In unit terms, revenue grew 4% y-o-y, while cash COGS fell 18%. Below the gross profit line, the company reduced the consultants’ fees by 78% and financing costs by 82%, which helped it to break even at the bottom line. In all, these results reflect the company’s success in streamlining its thermal coal business and should be further supportive of the stock.

Last updated on 23/04/2012

Industry outlook

We expect thermal coal prices to remain under moderate pressure on the back of the weak global economy.

Last updated on 23/04/2012