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【出版时间及名称】：2010年5月加拿大煤炭行业研究报告
【作者】：加拿大丰业银行
【文件格式】：pdf
【页数】：70
【目录或简介】：
Contents
Positive Outlook for the 2010 Coal Price 2
Recommendations 2
Coal Industry Overview 5
Metallurgical Coal Demand 5
Metallurgical Coal Supply 8
Thermal Coal Demand 9
Approach to Valuation 11
Positive Outlook for Coal Prices 11
Valuation Methodology 13
Sensitivity to Coal Prices 16
Key Risks 17
Western Coal Corp. – Rapid Growth with a Low-Risk Strategy 19
Summary and Investment Recommendation 20
Capital Markets Profile 22
Corporate Profile 24
Valuation and Analysis 27
Scenario Analysis: Western Coal Takeover of Grande Cache Coal 30
Operations Profile: Growing Production 31
Risks 38
Management 39
Grande Cache Coal Corporation – Unique Leverage to Metallurgical Coal 45
Summary and Investment Recommendation 46
Capital Markets Profile 47
Corporate Profile 48
Valuation and Analysis 51
Operations Profile – Limited Growth 54
Risks 58
Management 59
Positive Outlook for the 2010 Coal Price
Supply and demand fundamentals indicate continued strength in coal prices. Demand for
metallurgical coal has strengthened as stimulus spending boosts the demand for steel. We expect strong
metallurgical coal demand to continue as economic recovery boosts steel consumption, particularly in
emerging economies such as China, India, and Latin America. On the other hand, we expect the supply of
seaborne coal from Australia, the world’s largest exporter, to be constrained in the near term as port and
rail infrastructure has reached capacity.
Scotia Capital believes that the steel industry is at a recovery phase of the economic cycle. Coal
prices have recovered sharply since mid-2009 lows, as demand continues to strengthen. For example, spot
prices are currently over US$240/tonne for hard coking coal, significantly higher than the US$129/tonne
benchmark settled at this time last year. Strong transactions in the spot market are further evidence of a
positive outlook for coal markets.
North American producers to be an increasingly important source of metallurgical coal. We
anticipate that a growing number of metallurgical coal buyers could choose to negotiate first with
“independent” mid-tier coal suppliers such as the Canadian coal producers. In our view, buyers will be
attracted to North American mid-tier coal suppliers as an alternative to the increasingly hostile benchmark
negotiations. North American supply in particular should be increasingly important to meet growing
demand in the next five to 10 years as logistical constraints are expected to limit Australian producers to
export volumes approximately equal to current levels.
RECOMMENDATIONS
We have initiated coverage on the common shares of Western Coal Corp. (Western Coal) and
Grande Cache Coal Corporation (Grande Cache Coal), the two largest Canadian pure-play coal
mining companies. Our recommendations and estimates are summarized in Exhibit 1.
We have initiated coverage on the common shares of Western Coal Corp. with a 1-Sector
Outperform rating and a one-year target of C$7.75 per share, which implies a 37% rate of return. Our
Western Coal target price is based on a 4.5x EV/EBITDA (NTM) multiple (60% of our target price) and a
1.2x multiple to our 10% discount rate NAV (40% of our target price). Western Coal shares are currently
trading at 2.3x EV/EBITDA (2011E) and 0.6x NAV, significantly below our target EV/EBITDA and
P/NAV multiples. We see significant upside potential to the current Western Coal share price, as we
believe that the company’s exposure to peak-level metallurgical coal prices and its significant organic
growth potential is not reflected in the share price.
We have also initiated coverage on the common shares of Grande Cache Coal Corporation with a
2-Sector Perform rating and a one-year target of C$6.50 per share, which implies a 2% rate of return.
Our Grande Cache Coal target price is based on a 4.25x EV/EBITDA (NTM) multiple (60% of our target
price) and a 1.1x multiple to our 10% discount rate NAV (40% of our target price). Grande Cache Coal
shares are currently trading at 3.0x EV/EBITDA (2011E) and 0.7x NAV, also below our target
EV/EBITDA and P/NAV multiples, but above the NAV multiple for Western Coal, Grande Cache Coal’s
peer in our coverage universe. We believe that Grande Cache Coal’s current share price fully reflects the
probability of an acquisition. Grande Cache Coal should fundamentally be valued at a lower multiple than
Western Coal because of its lower growth potential and the higher risk that results from the company’s
high leverage to metallurgical coal prices.
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