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机构：中金公司
研究员：Yan CHEN
On September 6, Yancoal Australia Ltd (Yancoal) announced that its shares traded on the Australian Securities Exchange (ASX) would be added to the S&P/ASX200 index before the trading day on September 23. We expect more fund inflows into the company after its inclusion in the index.
Comments
Inclusion in index to boost fund inflows. According to the company announcement, S&P Dow Jones announced on September 6 that Yancoal’s Australian shares would be included in the S&P/ASX200 index and start trading as an ASX200 stock before the trading day opens on September 23. We believe Yancoal’s inclusion in one of the most representative indices in the Australian stock market may increase passive funds’ exposure to the company. Meanwhile, active funds are likely to pay more attention to the company, boosting the liquidity of individual stocks. As the firm’s valuation in the Hong Kong stock market is roughly level with its valuation in the Australian stock market, we expect its performance in the Hong Kong stock market to benefit from the inclusion.
Thermal coal prices fluctuate around a high level; coking coal prices relatively weak. As of September 6, prices of Newcastle high-calorific- value thermal coal, 5,500kcal thermal coal, and coking coal at the Peak Downs mine were US$143/t, US$87/t, and US$185/t. They have averaged US$140/t, US$88/t, and US$220/t since 2H24, up 7%, down 4%, and down 20% from 1H24. In 4Q24, we expect prices of high-calorific-value coal to remain high despite uncertainties such as geopolitical conflicts and 5,500kcal coal prices to rebound amid marginal demand recovery in China. We also expect coking coal prices to remain under pressure, but we think they are unlikely to plunge further thanks to the marginal cost support.
Coal prices to remain relatively stable; additional cost reduction to boost earnings growth. Considering that the firm mainly sells thermal coal (thermal coal and coking coal accounted for 88% and 12% of its sales volume in 1H24), we believe the solid performance of the thermal coal market will prop up the firm’s coal prices, and the weak coking coal fundamentals since 2H24 may have a limited impact on the firm’s coal prices.
According to the firm’s 1H24 results report and results briefing, it maintains its full-year guidance for equity-based commercial coal output at 35-39mnt (17mnt realized in 1H24) and cash operating cost guidance at AUD89-97/t (vs. AUD101/t in 2H24). In this context, we expect the firm to continue increasing production capacity and optimizing costs in 2H24.
Financials and valuation
We keep our 2024 and 2025 earnings forecasts unchanged at AUD1.07bn and AUD1.21bn. The stock is trading at 6.6x 2024e and 5.7x 2025e P/E. We maintain an OUTPERFORM rating and our target price at HK$38.00, implying 8.9x 2024e and 7.7x 2025e P/E, offering 35% upside.
Risks
Disappointing demand and/or production capacity expansion.