The Yancoal Australia Ltd (ASX: YAL) share price could be set to climb higher this morning after posting strong Q1 2019 production numbers in yesterday's after-market release.
What was in Yancoal's first quarter results?
Yancoal reported 17.3 million tonnes (Mt) of Run Of Mine (ROM) coal which was up 9% year-on-year (YoY) from March Quarter 2018 (MQ18).
The company's saleable coal numbers came in 2% higher YoY at 13.0Mt while attributable sales volumes were up 11% to 8.8Mt for the quarter.
Overall, the strong numbers indicate that production continues to track towards the guided target in a good result for Yancoal.
Management reported that there was no significant production impact on Yancoal from wet weather in Queensland, nor material negative sales volume impacts arising from the coal import delays into China in MQ19.
The company's FY19 guidance remains unchanged including:
- 35Mt (approx..) of attributable saleable coal production
- Freight on Board (FOB) price of $62.50 per tonne excluding royalty
- $285 million of sustaining and capital expenditure
Is Yancoal in the buy basket?
The Yancoal share price is down 6.8% so far this year and 15.3% since the start of March 2019 in what has been a rocky road for its investors.
It's been a similarly negative start to the year for fellow Aussie coal miners Whitehaven Coal Ltd (ASX: WHC) and New Hope Corporation Ltd (ASX: NHC) as slowing Chinese growth, ongoing shipment delays and macroeconomic headwinds have all stunted share price growth.
For its part, Yancoal tripled its profit in its February half-year results and is set to pay investors a special dividend on 30 April 2019. This record result was largely driven by higher global coal prices which have boosted underlying revenue and kept margins high in the last 6-12 months.
The major long-term risk I see facing Aussie coal producers is the phase-out of coal as a primary energy source in Australia in coming years.
With the possibility of a Federal Labor government being in power in the second half of the year, and a likely tilt towards more clean energy options as a result, I think New Hope's future growth prospects could be limited.
For those who want to look for growth outside of the mining sector, this top-rated stock could boost portfolio gains as it continues to soar in a $22 billion industry.
