Yancoal’s (YAL) 3Q24 operating data are slightly better than our expectation, with attributable production / sales volume increasing 10%/21% YoY (improved from -4%/+1% in 2Q24). Blended ASP dropped 14% YoY in 3Q24, which is largely in line with the market trend. We estimate Yancoal delivered ~A$1.78bn of revenue in 3Q24 (+5% YoY; +15% QoQ). YAL maintains the full-year ranges of guidance on sales volume, unit cost and capex. We maintain our earnings forecast and our NPV-based TP of HK$42. While any potential M&A progress, in our view, remains the key variable over the coming 3-6 months, we think such factor has been priced in with a <6x 2024E P/E. Maintain BUY.
　　Sales volume in 3Q24: Attributable sales volume of thermal coal / metallurgical coal was +17%/+56% YoY to 9mn/1.4mn tonnes in 3Q24.
　　Total attributable sales volume increased 21% YoY to 10.4mn tonnes. In 9M24, the total attributable sales volume grew 19% YoY to 27.3mn tonnes, which accounted for 73% of our full-year estimate of 37.3mn tonnes (run rate in 9M23: 71.6%).
　　ASP breakdown in 3Q24. Thermal ASP dropped 12% YoY (-3.7% QoQ) to A$157/t in 3Q24, within the range of GCNewc 6,000kCal (A$210/t or US$141/t) and API5 (A$137/t or US$87/t). Metallurgical ASP dropped 28% YoY to A$259/t (-19% QoQ), which was slightly higher than the benchmarks (average of Low Vol PCI and Semi-Soft). The blended ASP dropped 14% YoY (-6% QoQ) to A$170/t.
　　Solid balance sheet. As at end-Sep, Yancoal had a gross cash balance of A$1.98bn (+28% from Jun).
　　2024E full-year guidance unchanged: (1) attributable saleableproduction: 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) extreme weather that affects production.