Bengalla underpinned solid 3Q FY26 operations, but Goldman Sachs maintains Sell on NHC due to valuation

Overview

This report is Goldman Sachs' company research update following New Hope Corp.'s 3Q FY26 operational update. The report acknowledges the recovery in Bengalla's quarterly operations, higher group sales, lower costs, and reduced near-term risk from convertible bond refinancing, but the core investment conclusion remains cautious: although the 12-month target price was raised to A$3.80/share, it is still below the disclosed share price of A$5.32.

Core views

Goldman Sachs' core view is that NHC has executed well operationally in the short term, with Bengalla recovering to a 13.4Mtpa ROM run-rate and costs performing better than guidance; New Acland remains in the ramp-up phase with product mix volatility; Maxwell has progressed slightly better than expected and lifted NPV. However, the medium- to long-term thermal coal supply-demand outlook still warrants caution, and NHC is currently trading at about 1.4x NAV, implying a thermal coal price of about US$125/t, above Goldman Sachs' long-term estimate of US$100/t, so the Sell rating is maintained.

Analysis framework

The report uses a combination of operational breakdown, price and cost tracking, FY26 guidance comparison, and NAV plus EV/EBITDA valuation. The analysis focuses on production, sales, cash costs, capital expenditure, product mix, coal price benchmarks, diesel cost exposure, capital management, and target price model revisions for Bengalla, New Acland, and Maxwell.

Methodology notes

• Valuation framework50:50 NAV:NTM EV/EBITDA

  Target price methodology

  Goldman Sachs' target price methodology is based on 50% NAV and 50% NTM EV/EBITDA, with the target EV/EBITDA multiple unchanged at 4.5x.

• Fundamental forecastNAV/WACC adjustment

  Refinancing impact

  After the issuance of A$300mn senior unsecured convertible notes due 2032 and the repurchase of about 98% of the existing 2029 convertible notes, Goldman Sachs lowered WACC from 12.4% to 11.2%, lifting NAV to about A$3.8/share.

• Institutional disclosure frameworkGS Factor Profile

  Growth, financial returns, valuation multiples, and composite percentile

  Goldman Sachs Factor Profile is used to compare a stock's growth, financial returns, valuation multiples, and composite metrics against the market and sector peers, but the investment conclusion in this report is primarily driven by operations, coal prices, NAV, and EV/EBITDA valuation.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• New Hope Corp. (NHC.AX)

  Covered equity

  Strengths

  High cash balance, recovery in Bengalla operations, FY26 guidance maintained, and convertible refinancing extends debt maturity while reducing near-term refinancing risk.

  Weaknesses

  The share price is elevated relative to NAV and peer EV/EBITDA, with high implied assumptions for strong thermal coal prices.

  Comparison

  About 6.3x NTM EBITDA versus the global thermal coal peer median of about 4.5x; about 1.4x NAV.

  Risks

  Coal price declines, rising diesel costs, New Acland ramp-up volatility, and valuation multiple compression.

• Bengalla coal mine

  Core operating asset

  Strengths

  3Q FY26 ROM production of 2.6Mt, +16% quarter on quarter; FOB cash cost of A$74/t, materially below the FY26 guidance range.

  Weaknesses

  The company believes going beyond 13.4Mtpa to above 14Mtpa would require additional capital and cause pit congestion, making it a suboptimal path.

  Comparison

  Cost performance sits comfortably within FY26 guidance of A$81-89/t.

  Risks

  Weather, mining sequence, diesel costs, and logistics disruptions may affect performance in subsequent quarters.

• New Acland coal mine

  Asset in ramp-up and product mix volatility phase

  Strengths

  Coal sales rose slightly quarter on quarter to 1.0Mt, with the potential to stabilize after the integration of Manning Vale West and operation of the third pit.

  Weaknesses

  ROM production fell about 9% quarter on quarter, the high-ash product share rose to 76%, and realized price fell to A$129/t.

  Comparison

  Compared with Bengalla, New Acland's production and product mix performance was weaker this quarter.

  Risks

  Product mix volatility, ramp-up pace, road diversion capex of A$65-75mn, and market timing risk.

• Maxwell underground coal mine interest (NHC approximately 26%)

  Growth and equity investment asset

  Strengths

  First longwall production was achieved in mid-April, with pillar extraction planned to begin in mid-2026; sales to the Japanese market were 247kt at a 9% premium to gC NEWC 6000.

  Weaknesses

  Still in the ramp-up phase, with production and cost curves yet to be fully validated.

  Comparison

  Goldman Sachs raised Maxwell NPV to A$507mn, making a positive contribution to NHC NAV.

  Risks

  Longwall ramp-up, execution of pillar extraction, cost control, and sustainability of market premium.

• Thermal coal price benchmarks (gC NEWC 6000/API-5 5500)

  Key driver of earnings and valuation

  Strengths

  During the quarter, gC NEWC 6000 and API-5 5500 rose about 17% and 11% quarter on quarter, respectively, supported in the short term by geopolitics and coal-switching demand from gas.

  Weaknesses

  NHC group's realized price increased only about 1% quarter on quarter, dragged by a stronger Australian dollar and product mix.

  Comparison

  Goldman Sachs expects 6,000kcal NEWC prices of about US$115-120/t in 2026/27, below the spot level of about US$135/t.

  Risks

  Weaker medium- to long-term supply-demand conditions, prices reverting toward long-term marginal cost, and reversal of short-term supply shocks.

Key data

• Group saleable coal productionAbout 3Mt, +9% quarter on quarterAbove GSe and Visible Alpha consensus expectations, driven by improvement at Bengalla.
• Group coal salesAbout 3.3Mt, +10% quarter on quarterSupported by product inventory release and normalization of vessel queues at the Port of Newcastle.
• Underlying EBITDAAbout A$130mn, +22% quarter on quarterDriven by higher sales, lower unit cash costs, and an improved coal price environment.
• Cash balance at quarter-endAbout A$572mnIncluding about A$295mn in fixed income investments; a fully franked interim dividend of A10cps totaling about A$84mn has been paid.
• Bengalla ROM production2.6Mt, +16% quarter on quarterMining sequence recovered following prior weather disruptions, reaching a 13.4Mtpa ROM run-rate.
• Bengalla FOB cash costA$74/t, -12% quarter on quarterBelow FY26 guidance of A$81-89/t; Goldman Sachs expects about A$83/t for FY26.
• New Acland ROM production1.6Mt, -9% quarter on quarterStrip ratio rose to 2.7x, and a higher-ash product mix pressured realized prices.
• Maxwell sales to the Japanese market247kt, average price US$128/tA 9% premium to contemporaneous gC NEWC 6000; Goldman Sachs raised NPV attributable to NHC's 26% interest to A$507mn.
• Average gC NEWC 6000 priceAbout US$128/t, +17% quarter on quarterSupported by Middle East geopolitical tensions, LNG supply uncertainty, and coal switching in Japan, South Korea, and Taiwan.
• Group realized coal priceAbout A$141/t, +1% quarter on quarterIndex gains were partly offset by a stronger Australian dollar and a higher-ash product mix.
• FY26 group ROM guidance15.7-17.7MtThe company reiterated guidance.
• FY26 saleable production and sales guidance10.2-11.5MtGoldman Sachs estimates 11.7Mt.
• Bengalla sustaining capex guidanceA$100-130mnThe company indicated progress is trending toward the low end of the range.
• Target price revisionA$3.80/share, previously A$3.60/shareTarget price raised by 6%, FY26-28 EBITDA forecasts increased by about 1%, and NAV increased by 8%.

Impact & implications

For investors, the report conveys a conclusion of 'operational improvement, but valuation is insufficient to support upside.' Strong short-term coal prices, Bengalla costs below guidance, and the Maxwell ramp-up can support earnings expectations, but Goldman Sachs believes the share price has already priced in optimistic coal prices and production growth. If thermal coal prices revert toward long-term marginal cost or if higher diesel costs are reflected with a lag, valuation pressure may re-emerge.

Risks

• If thermal coal prices fall from elevated spot levels back toward long-term cost assumptions, NHC earnings and valuation may come under pressure.
• Higher diesel prices may feed through to energy costs with a 1-2 month lag; Goldman Sachs expects the impact to be more concentrated in the June quarter and incorporates higher diesel prices into FY27 costs.
• Before ramp-up of New Acland's third pit, product mix may continue to fluctuate, and a higher share of high-ash products would depress realized prices.
• If Bengalla attempts to exceed its average run-rate of 13.4Mtpa, it may require additional capital and create pit congestion.
• Upside risks to the Sell rating include thermal coal supply shocks and sustained strong prices, higher shareholder returns, and better-than-expected production from Bengalla, New Acland, and Maxwell.

What to watch

• Whether Bengalla can continue to maintain low costs and a 13.4Mtpa ROM run-rate in subsequent quarters.
• The stability of production, product mix, and realized prices after New Acland's third pit and Manning Vale West integration.
• The ramp-up speed of Maxwell's longwall mining and pillar extraction, and whether the Japanese market sales premium can be sustained.
• The combined impact of gC NEWC 6000, API-5 5500, the Australian dollar exchange rate, and diesel prices on realized prices and unit costs.
• Whether the A$100mn on-market buyback is launched, and whether dividend and capital management policies further enhance shareholder returns.
• Whether FY26 saleable production, sales, and Bengalla capex continue to track toward the low-cost/low-capex end of guidance.