Goldman Sachs Group maintained its 1733.HK buy rating, raising its target price to HK $5.70 from HK $5.40, after raising its 2011 earnings per share forecast by 5 per cent on expectations of higher profit margins.

Goldman Sachs Group believes that large-scale flooding in Queensland could affect Australia's coking coal exports (Australia is the world's largest exporter of coking coal) and will boost demand for alternative sources of coking coal, including Mongolia.

Goldman Sachs Group added that higher coking coal prices are conducive to higher profit margins. Goldman Sachs Group's US energy research team has raised its 2011 global coking coal price forecast by 11 per cent from US $229 per tonne to US $254 per tonne. due to a decline in mine production in Australia.

Goldman Sachs Group points out that the main risk facing Yonghui is that high profits will lead to more fierce competition and that Mongolian coking coal companies may try to sell products directly to buyers and bypass Yonghui Coking Coal.

Yonghui Coking Coal rose 1.75 per cent to HK $4.66 yesterday.