Anglo Pacific Group boosted by coal price as broker upgrades

Date: Jun 13, 2018

King coal appears to be back in the ascendancy and the rising price of the commodity was behind an upgrade for Anglo Pacific Group PLC (LON:APF), the mining royalty specialist.

Peel Hunt has bumped its valuation to 190p from 181p for shares in the business as it said it expected a ‘fade’ in the price of the black stuff to occur next year rather than this.

“Coal prices have been higher than expected over the past few months, due partly to logistics issues in a range of countries,” said analyst Peter Mallin-Jones in a note to clients.

“Demand has also been strong in Chinese steel output, and notably Chinese coal burn in power generation.

“This has driven an increase to our coal price estimates, lifting Anglo Pacific’s revenues and cash flows.”

Valuation underlines Anglo’s potential

So, why does this matter to Anglo? Well, it has exposure to the sector via royalty streams from the Kestrel and Narrabri mines in Australia, which were singled out by the Peel Hunt number cruncher.

The revised target price, meanwhile, was based on the average of the updated net asset value (187p) and the dividend yield valuation of Anglo (194p).

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