Australian Stocks: Lynas (LYC) Profit Plunges as China’s Appetite Wanes
Global Markets

Australian Stocks: Lynas (LYC) Profit Plunges as China’s Appetite Wanes

Story Highlights

Australian mining company Lynas Rare Earths reported a 74% decline in its first-half profits, hit by lower product prices due to a slowdown in demand from China.

In key news on Australian stocks, Lynas Rare Earths Limited (AU:LYC) reported a 74% plunge in its first-half profits for FY24, as China’s appetite for rare earths wanes due to macro uncertainty. Despite the downturn, early trading saw a positive market reaction, with shares reaching a high point of AU$6.15. This surge was fuelled by the company’s after-tax net profit of AU$39.5 million exceeding analysts’ consensus estimate of AU$25.7 million. Moreover, Lynas ended the first half with a cash balance of AU$686.1 million.

Lynas Rare Earths is a producer of rare earth minerals, specializing in products such as Neodymium and Praseodymium (NdPr), Lanthanum (La), Cerium (Ce), and more.

Highlights of the Results

For the six months that ended on December 31, 2023, Lynas reported a 36.5% drop in its revenue to AU$234.8 million. The top line was impacted by lower product prices. Recently, rare earth prices have experienced a sharp decline due to reduced demand in China, which has been affected by a downturn in the construction industry. The company’s EBIT decreased by 80% to AU$31.8 million.

The company’s CEO, Amanda Lacaze, stated that the financial year 2024 marks a transitional period for Lynas.

Last month, in its quarterly update, the company attributed its lower revenues and production to the temporary shutdown of the Lynas Malaysia facility. During the shutdown period, the company successfully upgraded the plant, enhancing its separation capacity and reliability. In January 2024, the company resumed operations at its Malaysian plant.

Is Lynas Stock a Good Buy?

According to TipRanks consensus, LYC stock has been rated a Strong Buy, backed by eight Buy and two Hold recommendations. The Lynas share price forecast is AU$7.53, which implies a growth rate of 28.8% from the current level.



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