Yancoal’s (YAL) 4Q24 volume data are in-line with the guidance and our expectation, with attributable production/ sales volume increasing 0%/3% YoY. Blended ASP, however, dropped 10% YoY in 4Q24 as the thermal coal ASP tracked closely with the market price of API5 (5500kCal). We estimate Yancoal delivered ~A$1.84bn of revenue in 4Q24 (-7% YoY; +3% QoQ). We trim our 2024E/25E earnings forecasts by 19%/6% after revising down our ASP assumptions by 6%/2%. Our NPV-based TP is revised down to HK$38 from HK$42. That said, we foresee YAL will likely resume a final dividend in the full year earnings announcement (Feb 2025), as we do not expect sizeable M&A plans in the near term. The stock is trading at 7%+ dividend yield, assuming 50% payout ratio. Maintain BUY.
　　Sales volume in 2024 in line with expectation: Attributable sales volume of thermal coal/ metallurgical coal was -1%/+29% YoY to 8.6mn/1.8mn tonnes in 4Q24. Total attributable sales volume increased 3% YoY to 10.4mn tonnes. For the full year in 2024, the total attributable production volume grew 10% YoY to 36.9mn tonnes, close to the mid-point of the guidance (35-39mn tonnes). Total attributable sales volume in 2024 grew 14% YoY to 37.7mn tonnes (thermal: +15% YoY, metallurgical: +10% YoY).
　　ASP breakdown in 4Q24. Thermal ASP dropped 10% YoY (+4% QoQ) to A$163/t in 4Q24, within the range of GCNewc 6,000kCal (A$211/t or US$138/t) and API5 (A$132/t or US$88/t). Metallurgical ASP dropped 17% YoY to A$242/t (-6.5% QoQ), which was close to the market price of Low Vol PCI.
　　Potential resumption of dividend payment. YAL highlighted in yesterday’s announcement that “We will be in a position to comment further on dividends after the Board meets in Feb to approve the 2024 financial results”. Back in Aug 2024, YAL halted the interim dividend due to potential M&A. With the lack of final deal since then, we see high chance for YAL to resume dividend in the final results.
　　Solid balance sheet. As at end-2024, Yancoal had a gross cash balance of A$2.46bn (+24% from Sep).
　　2024E full-year guidance unchanged: (1) operating cash cost (excluding royalties): A$89-97/t (-7% to +1% YoY); (2) 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.