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Mid-Cap

One Coal Company Can Face Resistance at the Current Levels - YAL

January 04, 2024 | Team Kalkine
One Coal Company Can Face Resistance at the Current Levels - YAL

YAL:ASX
Investment Type
Mid - Cap
Risk Level
Action
Rec. Price (AU$)

Yancoal Australia Ltd (ASX: YAL)

Yancoal Australia Ltd (ASX: YAL) is an Australia-based entity engaged in producing and developing metallurgical and thermal coal in Australia. It has a diversified portfolio of both open cut and underground coal mines in the global seaborne market.

Recommendation Rationale – SELL at AUD 5.35

  • Profit Booking: YAL share price has breached resistance 1 level recommended in the previous coverage on 20 December 2023; thus, it is offering a profit booking opportunity.
  • Technical Indicator: The momentum oscillator 14-Day RSI (~72.02) is in the overbought zone; and thus, prices can face correction in the short term.
  • Topline and Bottomline: During H1 FY23, revenue and NPAT fell by 17% and 44% YoY, respectively, due to lower realized sale price.
  • Increasing Cash Costs: During H1 FY23, operating cash costs increased by 31% YoY due to inflationary pressure.

Daily Chart

(Source: REFINITIV, Analysis by Kalkine Group)

Valuation Methodology: Price/Book Approach (FY24E) (Illustrative)

Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current market price of AUD 5.350, at 2:45 PM AEDT, as of 4 January 2024.

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 4 January 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.

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