NHC – New Hope Corporation

I think this share, although sitting at a high P/E will continue in a strong upward channel over the next few years.

It should be expected that New Hope will increase cash flow from around $60 million this year to around $140 million next year and remain at more than $100 million through to FY11 at least as the company attempts to lift output from the record 5.23 million tonnes shipped in 2007 to seven million tonnes by 2010.

Saraji will come on line in the years ahead, and the 18.8% stake in Arrow Energy looks like going from strength to strength. What a bargain they picked up there from Macquarie for their CH4 stake (post merger with AOE)!

Even allowing for a more subdued outlook for equity prices in coming months as economic growth both in Austalia and globally comes under pressure, NHC looks a sound investment. Which makes Soul Pat with a P/E under 10 a very cheap stock by any measure.

The CTL seems high risk to me given the higher carbon emissions, but their exploration acreage on the Darling Downs (see most recent presentation) makes me even more interested in their strategic investment in Arrow.