New Hope Corporation Limited (ASX: NHC)

New Hope Corporation Limited is an Australia-based diversified energy company. Its activities consist of development and operation of coal mines, port handling and logistics, agriculture, and oil and gas development and production.

Recommendation Rationale – Watch at AUD 6.070

• Revenue, Profit Increased: For the year ended 31 July 2023, NHC reported an 8% YoY jump in revenue at AUD 2,754mn due to a 23% annual increase in realised prices. Its net profit grew by 11% annually to AUD 1,087mn as strong demand and global supply constraints pushed thermal coal prices to record levels in the first half of FY23.
• Volatile Coal Prices: Coal prices may remain volatile in the near future considering weak industrial activity in China. This may impact the revenue and profitability of NHC.
• Market Volatility: The equity market can remain volatile considering rising US bond yield, geopolitical tensions, global economic slowdown, rising crude oil price, among others.
• Production decline: In FY23, total saleable coal produced stood at 7.2Mt, down 9% over 7.9Mt produced in FY22.
• Technical Standpoint: The momentum oscillator, 14-day RSI (~48.06) is hovering in the neutral zone and indicates indecisive action.

NHC Daily Chart

 (NHC Daily Technical Chart; Source: REFINITIV)

Noted below are the key price indicators for the stock:

Considering the current market volatility, risks associated and financial performance, a ‘Watch’ recommendation is given on the stock at the closing market price of AUD 6.070, down ~0.654%, as on 26 October 2023.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 26 October 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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