Yancoal (ASX: YAL) profit declines in 3QFY23 despite higher production

Highlights

• Yancoal is an ASX-listed company which is engaged in production and development of metallurgical and thermal coal in Australia
• In 1HFY23, revenue of the company stood at AUD 3,976 million and profit after tax stood at AUD 973 million
• Yankuang Energy Group Co Ltd has the highest stake in YAL, with a shareholding of around 62.26%

Yancoal Australia Ltd (ASX:YAL) is a materials company which is focused on producing and developing thermal and metallurgical coal in Australia. The company manages a diversified portfolio of open cut and underground coal mines in the international seaborne market. It produces a mix of PCI, premium thermal and semi-soft coking coals for export.

In 1HFY23, the company reported a 16.75% YoY drop in revenue to AUD 3,976 million and 44.02% YoY fall in profit after tax to AUD 973 million.

In the 2QFY23, YAL reported higher production over the previous quarter, with further production gains targeted in 3Q and 4Q. The revenue and incremental costs related to the recovery plans were impacted by lower realized prices, resulting in profit decline.

Top 10 shareholders of YAL

The top 10 shareholders of YAL have around 79.43% shareholding in the firm, while the top four have nearly 77.37% of shareholding. The top two shareholders of YAL are Yankuang Energy Group Co Ltd and Cinda International Hgb Investment (UK) Ltd, with a shareholding of ~62.26% and ~12.57%, respectively.

Recent business update

Through an ASX update dated 8 December 2023, the company shared that its subsidiary firm, HV Operations Pty Ltd has agreed to extend the term of the 2022 Diesel Fuel Supply Agreement with Glencore Australia oil Pty Ltd by two monthstill 31 December 2023. 

On 19 October 2023, the company shared the quarterly report for the third quarter of 2023. During the reported period, attributable coal production grew by 9% over the previous quarter, and the average realized price dropped by 13% to AUD 197/t. The company ended the quarter with cash balance of AUD 920 million, including interim dividend of AUD 489 million.

Outlook

In the thermal coal markets, the supply and demand appear balanced. The market response to temporary disruptions and seasonal factors indicated that there is no structural oversupply and shortfall.

The metallurgical coal markets demonstrated positive price trends in late 3QFY23, supported by some supply constraints from Queensland.

The company is focused on bolstering production and controlling cash operating costs to ensure continuous cash generation in all coal market conditions.

Share performance of YAL

YAL shares closed 1.04% up at AUD 4.86 apiece on 20 December 2023. Including today’s gain, the share price has decreased by 23.22% in the last 12 months and has increased by 7.76% in the last six months.

The 52-week high of YAL is AUD 6.96, recorded on 13 March 2023, while the 52-week low is AUD 4.35, recorded on 26 June 2023.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 20 December 2023. The reference data in this report has been partly sourced from EODHD/Others.

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