The future of AZJ, page-55

GS updated research report came out overnight. GS did a 180 degree u-turn and reversed its previous 'buy' call to a 'sell', dropped its target price from $5.54 to $3.65, big drop in target price.

GS words (not mine):
downgrade to Sell as valuation review proves unsupportiveWe lower our 12-month target price by 34% to A$3.65, afterconducting a review of: (i) the near term earnings outlook(FY21/22/23 EBIT -0.1%/-2.5%/-6.7%) and (ii) valuation metrics andmix within our current Target Yield / NPV valuation methodology.Despite the stock price falls to date, our revised target price ofA$3.65 still suggests a further 5% downside from current levels (vs.average +6% for our coverage), largely mitigating the potential yieldreturn (c.6%) over the coming 12 months. With the long termfundamental value tied to such uncertainty, we have downgradedour rating on AZJ to Sell (was Buy).

For myself I am holding, whilst coal might have reduced relevance to Australian consumption, I still believe it will have fundamental demand in Asia where most of the heavy manufacturing occurs. In addition Asia has installed quite a number of recent coal power stations, these are not going to get suddenly switched off.