20250718-招银国际-兖煤澳大利亚-03668.HK-Strong_production_volume_growth_in_2Q25_but_sales_affected_by_logistical_issue_7页_1mb

Yancoal Australia (3668 HK) Equity Research Update

Key Highlights

• Production/Sales Performance:
  Yancoal Australia's attributable production volume increased by 15% YoY to 9.4mn tonnes in 2Q25, while sales volume declined -6% YoY to 8.1mn tonnes due to adverse weather disrupting port operations. Thermal ASP dropped 22% YoY to A$130/t, aligning with market trends, while blended ASP fell 22% YoY to A$142/t.

• Financials:
  Revenue for 2Q25 was A$1.14bn, representing an 8% YoY decline and $0.2bn quarter-over-quarter dip. 2025E earnings forecasts are revised down by 22%, primarily due to lower coal prices despite stable volume assumptions.

• Valuation & Rating:

  • Target Price revised from HK$36 to HK$34 (down 6.4%), reflecting YAL's current price HK$31.95.
  • BUY rating maintained, supported by:
    1. Anticipated improvement in sales-to-production ratio due to logistics recovery.
    2. Thermal coal prices showing signs of rebound (since June).
  • NPV-based valuation assumes long-term thermal coal prices of A$130/t and metallurgical coal A$200/t from 2028E.

• Financial Strength:
  As at Jun-2025, Yancoal holds A$1.8bn in gross cash (~20% market cap), providing buffer against volatility.

• Full-Year Guidance:
  Unchanged for 2025:

  • Sales volume: 35-39mn tonnes (+5% to +6% YoY).
  • Cash costs: A$89-97/t, capex: A$750-900mn.

• Key Risks:

  • Further coal price declines.
  • Unit cost inflation or operational inefficiencies.
  • Weather disruptions affecting production/delivery.

Strategic Outlook

• Despite near-term challenges, Yancoal's strong production outlook (+15% YoY in 2Q25) positions it to meet full-year targets.
• Recovery from logistics issues and mid-cycle price rebounds are key catalysts.
• Cash reserves underpin financial stability, supporting dividend sustainability.