The Zhitong Finance App learned that Anxin International released a research report stating that it maintains Yancoal Australia's (03668) “buy” rating, with a target price of HK$34.78. The bank believes that the company's production will recover further this year, and profit margins will remain at a relatively good level. For the company's 2024/2025 EPS forecast, the target price is HK$1.05/1.04, and the target price is HK$34.78, respectively.
Anxin International's main views are as follows:
In the first quarter, coal production rose sharply year on year, and there was a month-on-month decline.
The company's commercial coal equity production in the first quarter of 2024 was 8.8 million tons, a sharp increase of 49% over the previous year, thanks to the company's previous investment in floods and the resumption of production; the month-on-month decline was mainly due to continued mining and seasonal humid weather and further unplanned maintenance. The annual production guidelines remain unchanged at 3,500 to 3,900 million tons, and the overall production pace is still expected to weigh more in the second half of the year than in the first half of the year.
Average sales prices have declined and are expected to remain balanced throughout the year.
The company's average coal price in the first quarter was 180 Australian dollars/ton, of which the average sales price of thermal coal was 159 Australian dollars/ton, down 12% from the previous month; the average sales price of metallurgical coal was 334 Australian dollars/ton, up 14% from the previous month. In the face of a warm winter in the northern hemisphere, weak global economy, and strong export supply from regions such as Australia and Indonesia, overseas thermal coal prices have not plummeted, indicating that the thermal coal market is relatively balanced.
Cost guidelines remain unchanged, and profit levels remain high.
The company maintains a cash operating cost guideline of AUD89-97 per tonne. The realized price of coal in the first quarter was equivalent to twice the guideline's lower cash cost limit, indicating that the company still maintained a good profit margin. The company is also a producer with a competitive cost advantage in the Australian industry. Coupled with interest-free loans and a huge net cash position, this will help the company maintain a strong ability to generate cash and compete in the current coal market conditions.
The dividend policy attracts.
The company's dividend policy is to pay no less than 50% of net profit after tax (excluding non-recurring items) or 50% of free cash flow (excluding non-recurring items) for each fiscal year under normal circumstances.
Risk warning: demand falls short of expectations; coal prices fall rapidly; production and sales fall short of expectations.