In a report released on February 21, Wayne Fung from CMB International Securities maintained a Buy rating on Yancoal Australia Ltd. (YACAF – Research Report), with a price target of HK$36.00.
Wayne Fung has given his Buy rating due to a combination of factors influencing Yancoal Australia Ltd.’s financial performance and market position. One key reason is the company’s decision to resume dividends with a 56% payout ratio, which aligns with its policy and is likely to bolster investor confidence. Despite a 33% year-on-year drop in net profit to A$1.2 billion in 2024, the result exceeded expectations due to a favorable foreign exchange gain, signaling resilience in challenging market conditions.
Another factor supporting the Buy rating is the current valuation of the company, which remains attractive even after a downward revision of earnings forecasts. The GC Newc coal price has decreased by 17% year-to-date, offering a potential opportunity for price recovery. Furthermore, Yancoal holds a substantial cash reserve, equating to 30% of its market capitalization, which provides financial stability. The company’s guidance for 2025 suggests stable production and cost management, with key risks being a further decline in coal prices and potential cost increases.
YACAF’s price has also changed slightly for the past six months – from $3.920 to $3.790, which is a -3.32% drop .