Yancoal’s (YAL) 2Q24 operating data came in slightly below our expectation, with only 1% YoY increase in attributable sales volume due to adverse weather conditions and operational factors such as longwall move and wash plant throughput rates. Blended ASP dropped 20% YoY in 2Q24 but is in line with the market trend and our expectation. We estimate Yancoal delivered ~A$1.5bn of revenue in 2Q24 (-20% YoY; +3% QoQ). YAL maintains the full-year sales volume guidance unchanged. We still see chances for YAL to achieve the target range when volume growth improves in 2H24E. We have left our earnings forecast unchanged and will revisit our assumptions upon the release of 1H24 earnings in Aug. Maintain BUY and our NPV-based TP of HK$45. The stock remains attractive at 6.2x 2024E P/E and 8% yield.
　　Sales volume in 2Q24: Attributable sales volume of thermal coal / metallurgical coal was +3%/-17% YoY to 7.5mn/1mn tonnes in 2Q24. Total attributable sales volume increased 1% YoY to 8.6mn tonnes. In 1H24, the total attributable sales volume grew 17% YoY to 16.8mn tonnes, which accounted for 45% of our full-year estimate of 37.3mn tonnes (run rate in 1H23: 43.5%).
　　ASP breakdown in 2Q24. Thermal ASP dropped 17% YoY (+2.5% QoQ) to A$163/t in 2Q24, within the range of GCNewc 6,000kCal (A$206/t or US$136/t) and API5 (A$134/t or US$89/t). Metallurgical ASP dropped 21% YoY to A$318/t (-5% QoQ), which was higher than the benchmarks as YAL’s met ASP generally lagged behind the market price by a quarter. The blended ASP dropped 20% YoY (+0.5% QoQ) to A$181/t.
　　Solid balance sheet. As at end-Jun, Yancoal had a gross cash balance of A$1.55bn. We expect Yancoal to maintain a strong net cash position going forward.
　　2024E full-year guidance unchanged: (1) Attributable saleable production: 35-39mn tonnes (up 5%-17% YoY); (2) operating cash cost (excluding royalties): A$89-97/t (-7% to +1% YoY); (3) capex: A$650-800mn (up 5%-29% YoY).
　　Key risks: (1) further decline in coal price; (2) rebound of unit cost; (3) unfavourable weather that affects production.