Yancoal’s (YAL) 2Q25 attributable production/ sales volume +15%/-6% YoY, due mainly to temporary port closure as a result of adverse weather that affected delivery. Blended ASP dropped 22% YoY in 2Q25 but was largely in-line with market trend. We estimate Yancoal delivered ~A$1.14bn of revenue in 2Q25 (- 26% YoY; -14% QoQ). Our 2025E/26E/27E earnings forecasts are revised down by 22%/17%/13%, largely due to lower coal ASP despite slightly higher volume assumptions. That said, we maintain our BUY rating as (1) we expect the sales to production ratio to increase in 3Q25E, driven by the improvement of the logistical issue; (2) the thermal coal price has been rebounding since Jun. Our NPV-based TP is revised down to HK$34 from HK$36.
　　Likely hit the high end of full-year target due to strong production volume in 2Q25: Attributable sales volume of thermal coal/ metallurgical coal was -9%/+30% YoY to 6.8mn/1.3mn tonnes in 2Q25 (total attributable sales volume -6% YoY to 8.1mn tonnes). On the production side, the total attributable volume grew 15% YoY to 9.4mn tonnes in 2Q25. In 1H25, the total attributable production volume grew 11% YoY to 18.9mn tonnes, which accounted for 48-54% of YAL’s full-year guidance (35-39mn tonnes). Management is confident of reaching the upper end of the range for the full year.
　　ASP breakdown in 2Q25. Thermal ASP dropped 20% YoY to A$130/t in 2Q25, within the range of GCNewc 6,000kCal (A$157/t or US$100/t) and API5 (A$107/t or US$68/t). Metallurgical ASP dropped 38% YoY to A$197/t, which was close to the market price of Low Vol PCI.
　　Sitting on large cash balance. As at Jun-2025, Yancoal had gross cash of A$1.8bn, equivalent to ~20% of the current market cap.
　　2025 full-year guidance unchanged: (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).
　　Key risks: (1) further decline in coal price; (2) rebound of unit cost; (3) extreme weather that affects production and delivery.