The hottest commodity right now is arguably coal. The price of black gold has been rocketing higher this year after Russian exports were taken off the market and Europe faces an energy crisis.
And with Russian coal unlikely to return to the market any time soon, coal miners look well-placed to generate big profits for some time to come.
While many investors will be well aware of giants New Hope Corporation Limited (ASX: NHC) and Whitehaven Coal Ltd (ASX: WHC), one ASX coal share that could be flying under the radar is Bowen Coking Coal Ltd (ASX: BCB).
But that may not be the case for much longer, with analysts at Morgans tipping Bowen Coking Coal to become a metallurgical coal force in the future.
What is Morgans saying about this ASX coal share?
According to a recent note, the broker has initiated coverage on the company's shares with a speculative buy rating and 54.6 cents price target.
Based on the current Bowen Coking Coal share price of 44 cents, this implies potential upside of 24% for this ASX coal share over the next 12 months.
Morgans has described the company as "an emerging force in met coal" and believes it is well-placed to become a significant producer. The broker explained:
Bowen Coking Coal (BCB) is transforming into a significant coal producer thanks to prescient acquisitions and the ability to leverage current coal price strength. BCB looks comfortably funded to refurbish its flagship asset at Burton, with coal sales now ramping up from Bluff and Broadmeadow (BME). We think BCB justifies a price premium to reflect its: 1) acquisition track record; 2) clear strategic/corporate appeal; and 3) scarcity value in a hot coal market. We initiate coverage with a Speculative Buy noting 38% [now 24%] upside to our 55cps target. Our valuation under a strong bull case price scenario rises to 71ps (80% [now 61%] upside).
Another positive is that the company has the option to add thermal coal into the mix if desired. Morgans highlights:
While predominantly a met coal asset (60% HCC), Burton has interesting optionality to sell a thermal product should a prolonged energy crisis support the current +40% arbitrage in thermal coal prices over HCC [hard coking coal].
