YAL’s net profit in 2024 came in at A$1.2bn, down 33% YoY but 8% above our estimates due to a higher-than-expected FX gain (A$149mn). YAL declared a final dividend of A$0.52/share, which is long-awaited by the market. The pay- out ratio of 56% is in line with YAL’s dividend policy, which we believe will enhance investors’ confidence. YAL introduced guidance for 2025E, with the range of output and unit cost largely the same as that in 2024 while capex will be higher. Our 2025E/26E earnings forecast is revised down by 13%/12%, largely due to lower coal ASP and slightly higher cost assumptions. Our NPV- based TP is revised down to HK$36 from HK$38. We still maintain BUY on YAL as (1) the GC Newc (6000kCal) price has already pulled back 17% YTD, and (2) the current valuation, after our earnings cut, is not too excessive (<8x 2025E P/E; >6% yield).
　　Key highlights in 2024 results. Revenue dropped 12% YoY to A$6.86bn, as the 14% YoY coal sales volume growth (to 37.7mt) was more than offset by the 24% YoY decline in blended coal ASP (to A$176/t). Other income surged 5x YoY to A$159mn due to a FX gain of A$149mn. Net profit declined 33% to A$1.2bn due to operating de-leveraging. In 2H24, revenue/net profit dropped 2%/6% YoY to A$3.7bn/A$796mn.
　　Stable unit cash cost in 2H24 YoY. YAL achieved unit cash cost(excluding royalties) of A$86/t in 2H24 (largely flat YoY but down 15% HoH), as mines were running at high utilisation rates in 2H.
　　Sitting on large cash balance. As at end-2024, Yancoal had net cash of A$2.35bn, equivalent to 30% of the current market cap.
　　2025 full-year guidance introduced: (1) attributable saleable production: 35-39mn tonnes (-5% to +6% YoY); (2) operating cash cost (excluding royalties): A$89-97/t (-4% to +4% YoY); (3) capex: A$750-900mn (up 6%- 28% YoY).
　　CMBI will host NDR for YAL on 24 Feb (next Mon). Please contact yoursales representative for details.
　　Key risks: (1) further decline in coal price; (2) rebound of unit cost; (3) extreme weather that affects production.