20260226-招银国际-兖煤澳大利亚-03668.HK-2025_profit_below_consensus_resilient_coal_price_to_support_2026_earnings_8页_959kb

Yancoal Australia (3668 HK) Summary

Core Content

Yancoal Australia (YAL) reported a net profit of A$440 million for FY25, a decline of 64% YoY, which is 15% below Bloomberg's consensus but 20% above the analysts' own estimates. The company declared a final dividend of A$0.122 per share and an interim dividend of A$0.062 per share, resulting in a 55% pay-out ratio, consistent with its dividend policy. The company maintains a BUY rating with a revised target price (TP) of HK$38, up from HK$31, based on a revised long-term thermal coal price assumption of A$140/t.

Key Financial Highlights

Metric	FY24A	FY25A	FY26E	FY27E	FY28E
Revenue (AUD mn)	6,860	5,949	6,144	6,383	6,589
YoY growth (%)	-11.8	-13.3	3.3	3.9	3.2
Net profit (AUD mn)	1,215.9	439.9	577.1	633.9	664.4
EPS (Reported) (AUD)	0.92	0.33	0.44	0.48	0.50
YoY growth (%)	-33.1	-63.8	31.2	9.8	4.8
P/E (x)	6.6	18.4	14.0	12.7	12.2
P/B (x)	0.9	0.9	0.9	0.8	0.8
Yield (%)	8.5	3.0	3.9	4.3	4.5
ROE (%)	13.7	4.8	6.3	6.7	6.8
Net gearing (%)	-25.2	-22.6	-22.3	-26.3	-25.9

Main Points

2025 Performance

• Revenue: Declined by 13% YoY to A$5.83 billion.
• Attributable coal sales volume: Increased by 1% YoY to 38.1 million tonnes.
• Blended coal ASP: Declined by 17% YoY to A$146/t.
• Other income: Fell by 53% YoY to A$74 million due to reduced FX gains.
• Net profit: Dropped by 64% YoY to A$440 million, primarily due to operating deleveraging.
• 2H25: Revenue and net profit fell by 12% and 65% YoY to A$3.2 billion and A$277 million respectively.

2026 Outlook

• Attributable saleable production: Expected to grow by 3% to 36.5-40.5 million tonnes.
• Operating cash cost (excluding royalties): Estimated to increase by 1-7% YoY to A$90-98/t.
• Capex: Projected to be A$750-900 million, up 0-20% YoY.
• Earnings forecast: Revised up by 26% for 2026E and 10% for 2027E, due to revised coal price assumptions and stable production.
• Coal price assumptions: Revised up by 8% in 2026E and 7% in 2027E, reflecting signs of price stabilisation.
• Long-term thermal coal price: Assumed at A$140/t, reflecting higher-than-expected power demand.
• Long-term metallurgical coal price: Remains at A$200/t.

Key Risks

• Further decline in coal prices.
• Elevated input costs.
• Extreme weather impacting production and delivery.

Dividend Policy and Financial Position

• Dividend payout: Maintains a consistent policy of paying out 50% of after-tax profit or free cash flow, whichever is higher.
• Dividend yield: Increased to 3.9% for FY26E and 4.3% for FY27E.
• Cash position: As of end-2025, YAL had A$2 billion in gross cash, equivalent to ~25% of its current market cap.
• Net gearing: Remains negative, indicating a strong balance sheet.

Production and Sales

• Marketable coal production (100% equity basis): Increased slightly in 2025 to 12.6 million tonnes.
• Attributable sales volume: Increased by 1% YoY to 8.4 million tonnes.
• Thermal coal sales: Slightly declined in 2025, with a 4% drop in thermal coal sales volume.
• Metallurgical coal sales: Increased by 40% in 1Q25 and 30% in 2Q25.
• Blended coal ASP: Declined by 13% YoY to A$157/t.

Cost Analysis

• Unit cash cost: Remained at A$92/t in 2025, but is expected to rise in 2026E-27E due to rising raw material costs.
• Unit cash margin: Increased slightly to A$54/t in 2025, but is expected to decline in 2026E-27E.

Valuation

• Valuation method: Net Present Value (NPV) based on future cash flows and effective mine life.
• Target Price (TP): Revised to HK$38, up from HK$31.
• Sensitivity analysis: TP is sensitive to coal price and WACC, with a higher TP at higher coal prices and lower WACC.

Analyst Notes

• Analyst: Wayne FUNG, CFA.
• Contact: (852) 3900 0826, waynefung@cmbi.com.hk.
• Company data and estimates: Used for financial analysis and projections.
• Auditor: ShineWing Australia.

Summary of Key Assumptions

• Long-term thermal coal price: A$140/t (up from A$130/t).
• Long-term metallurgical coal price: A$200/t (unchanged).
• Unit cash cost inflation: 1% p.a. (unchanged).
• WACC: 7.2% (up from 6.7%).
• Risk-free rate: 4.5% (up from 4%).
• Risk premium: 6%.
• Beta: 0.5x.
• Debt/capital ratio: 10% (unchanged).
• AUD/HKD rate: HK$5.5 (up from HK$5.0).

Conclusion

Yancoal Australia is maintaining its BUY rating due to resilient seaborne coal prices supported by Indonesia's production cut policy, a healthy balance sheet, and a consistent dividend policy. The company is expected to see improved earnings in 2026E and 2027E due to revised coal price assumptions and stable production. The target price has been revised up to HK$38, reflecting the updated long-term coal price outlook and strong cash position. Key risks include potential further declines in coal prices, rising input costs, and extreme weather impacting operations.