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Date : 01/09/2022

Lynas Rare Earths (ASX: LYC) Shares Soar After FY22 Results

Australian mining business Lynas Rare Earths Limited (ASX: LYC) is the world’s largest producer of rare earth elements outside China. After China, Lynas is the world’s most valued independent rare earth producer. The company’s origin date extends back to 1983, and its headquarters can be found in Kuantan, Pahang, Malaysia.

Lynas meet approximately 20% of the world’s rare earth element demand. The business is split into two main divisions. Mount Weld, Western Australia, is home to a mining concentration plant, while Kuantan, Malaysia, is home to a refinery.

The company says its project at Mount Weld is one of the world’s best mines for rare earth elements. The United States Government has awarded the corporation a few contracts.

Lynas Rare Earths shares now soar after announcing positive FY22 results.

Lynas Rare Earths: FY22 Results Highlights

Lynas Rare Earths ASX shares are trading at $9.03 and have gained more than 1.2% in the previous trading session. The current market cap of the company is 8.15 Billion AUD.

ASX LYC News & Analysis

  1. Lynas’ revenue in FY22 is $920 million. The increase in Lynas Rare Earths revenue to $920 million represents an 88% gain.
  2. The company recorded an increase in NPAT of 244%, reaching $540.8 million.
  3. Its EBITDA increased by 156% to reach $601.2 million.
  4. The cash and cash equivalents balance at the end of FY22 was $965.6 million.
  5. The company announced that it would not be paying dividends this year.

Important Events in FY22

The world’s desire to end China’s monopoly on rare earth minerals has been good for Lynas Rare Earths, the only significant producer of rare earth minerals outside China. For instance, in June, the United States Department of Defense inked a $120 million contract with the firm to construct a rare earths separation facility in the United States.

One may argue that the economic benefits of geopolitical tensions come with a price. A cybersecurity company disclosed in June that Lynas was the target of a pro-China social media campaign.

Due to COVID-19, Lynas’s Malaysian factory was shut down for 11 days in October, though the business used the downtime to conduct maintenance.

LYC: CEO and Managing Director’s Remarks

According to Lynas CEO and managing director, $965.6 million in cash on hand at the end of the year will allow the company to confidently pursue its many expansion opportunities. Having a secure supply chain for rare earth elements from its plants in Western Australia and Malaysia to their partners in Vietnam, Japan, and Europe is crucial, and Lynas is in a special position to provide this. He further added that their most important clientele appreciates this feature.

Shipping agreements, input price reductions, water supply concerns, and the lingering effects of the COVID-19 pandemic were only a few of the external environment challenges that were somewhat offset by the company’s continuous initiatives.

What’s Next for Lynas Rare Earths?

Lynas rare earth share price volatility is typical in the cyclical resource sector. However, investors had anticipated a positive FY22 results outcome due to rising commodity prices.

Lynas rare earth share price has been down 18% in 2022 and is down 9% from its August peak. LYC’s P/E ratio dropped from 29.6 to 13.4 before the FY22 financials were released. Given that LYC shares trade at relatively low multiples, it is definitely worth considering for long-term investors.

 

Lynas Rare Earths News and Insights:

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