Goldman Sachs: Lower Yankuang Energy Group's (01171) target price to 7.3 Hong Kong dollars, maintains "neutral" rating.

Goldman Sachs released a research report stating that it has lowered profit forecasts for Yankuang Energy Group (01171) by 17% and 9% for the next two years, reflecting the decline in benchmark prices for coal in China and shipping, as well as an increase in coal production by Yankuang, maintaining a "neutral" rating on the stock and lowering the target price from HK$7.8 to HK$7.3. The bank expects the company's commodity coal production to reach 157 million tons this year, a 10% increase year-on-year, mainly driven by a 10 million ton production expansion in Xinjiang region. However, due to lower average selling prices and unit profits, the additional production is expected to have almost zero contribution to profits. The bank expects the average spot price of Qinhuangdao 5500 kcal power coal to be 706 RMB per ton, a 17% decrease year-on-year. However, it predicts that spot prices should stabilize in the short term as independent power plants have already completed destocking. It is forecasted that the prices of seaborne thermal coal and coking coal will decrease by 1% to 17% from last year from this year to 2027, with these sectors accounting for 33% of Yankuang's own coal production.