Summary
Coal miners are in lawmakers' cross-hairs and have a limited shelf life—Bogdanka is no different. Despite the Polish government banning Russian coal, they will find a way to get the coal needed either locally or from international markets. The market will stabilise over the next few years, but the Paris accord means that Polish coal mining will be gone by 2049. With little debt, a lot of cash, and plenty of free cash flow coming over the next few years, Bogdanka should provide a reasonable shareholder return.
Stock: Lubelski Wegiel Bogdanka S.A.
Ticker: WSE: LWB
Date: September 15, 2022
Market cap: zł1.4bn
Rating: Buy
Price: zł41.30
Target: zł69.40
Setting the stage
Bogdanka is a Polish coal miner. The company digs coal from its mine near Lublin in South East Poland and sells it to electricity, heat and cement producers, also in Poland. It produces 29% of the coal supplied to commercial power producers in Poland and has 20% of the Polish hard coal market.
The company has three excavation…