Stanmore Resources (SMR) - Yield on offer
August 2, 2024
Stanmore Resources is an Australian company with operations and exploration projects in the Bowen and Surat basins.
The company is a globally significant metallurgical coal producer with three operating assets: Isaac Plains complex, South Walker Creek (SWC) and Poitrel. Stanmore is also delivering incremental growth at SWC (+1Mt by CY26) and has organic growth options at the recently acquired Eagle Downs asset (transaction expected to close 2HCY24).
Stanmore’s underlying business is achieving strong underlying EBITDA margins (28% in CY24). Free cash flow (FCF) will be lower in CY24 due to one-off impacts, but this should also drive strong FCF yields in CY25 (21%) and CY26 (19%). We also forecast the stock to pay a solid dividend of US$0.11 per share in CY24, representing a circa 5% yield, before increasing in CY25 to US$0.14 per share, for a yield of around 7% yield. This compares favourably to other coal names under our coverage, which offer an average yield of circa 2%.
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