Yancoal: Buy Rating on Earnings Leverage to Gas-Driven Coal Price Upside

CMB International Securities analyst Wayne Fung has maintained their bullish stance on YACAF stock, giving a Buy rating yesterday.

Wayne Fung has given his Buy rating due to a combination of factors tied to the current energy market dislocation and Yancoal’s earnings leverage. The sharp jump in European gas prices following supply disruptions in the Middle East is likely to prompt utilities to substitute gas with coal, reinforcing a historically strong positive linkage between seaborne thermal coal and European gas benchmarks.

With thermal coal expected to constitute the bulk of its sales, Yancoal is well positioned to capture upside from any sustained strength in coal prices, and its profits are highly sensitive to such price moves. Fung maintains a Buy recommendation and an NPV-derived target price that does not yet incorporate potential additional gains from the recent gas-driven coal rally, while noting downside risks from weaker coal prices, higher operating costs, or weather-related production interruptions.

According to TipRanks, Fung is a 5-star analyst with an average return of 25.3% and a 53.09% success rate. Fung covers the Industrials sector, focusing on stocks such as J&T Global Express Limited, Yuexiu Transport Infrastructure, and Sany Heavy Equipment International Holdings Co.

In another report released yesterday, TipRanks – xAI also reiterated a Buy rating on the stock with a A$7.00 price target.