Key takeaways:

1. Saleable production of 29.4 Mt, down from 36.7 Mt in the prior year.
2. Avg realised sale price of $387 / Tonne, vs $141 / tonne prior year.
3. Revenue : $10.5 billion, up from %5.4 Billion in prior year.
4. NPAT: $3.5 billion or $2.70 per share
5. Final Dividend: 70 cents per share fully franked.

Outlook:

1. 2023 sales production guidance of 31-36 Mt.
2. Operating cash costs: $92-102 / Tonne.
3. Capital expenditure of $750 - 900 million.

Coal prices:

Yancoal assessment of coal prices going forward is:

1. US$69-$239 / Tonne for thermal
2. US$136-$240 / Tonne for metallurgical

The above estimate is based on the 2015 Paris Agreement, which indicates coal demand to be as follows:

• Seaborne demand for thermal coal to remain steady to 2024, then declining by 33% over the period to 2040.
• Seaborne metallurgical demand for metallurgical coal will actually increase up to 2040.

DISC - HELD

There currently is a significant disparity in thermal coal prices, as indicated below:

• Newcastle Thermal coal, 6000kCal price per Tonne: $421 USD (Sept. 30 2022)
• API5, 5500kCal price per Tonne: $195 USD (Sept. 30 2022)

The 2021 YAL Annual report stated the majority of YAL thermal coal is sold on contracts linked to the API5 5500 kCal index..

However, in 2021, Yancoal implemented a "hard wash" strategy to reduce the ash content of its API5 coal in order to upgrade a portion of it to Newcastle Thermal coal 6000kCal grade. The hard wash strategy added $2 / Tonne production cost to the API5 coal in question (reported in 2021 AR), and is generating a remarkable return in the process.

Despite the Q3 2022 quarterly report stating that the majority of thermal coal is sold under the API5 5500 kCal index, the actual prices achieved reveal 62% of thermal coal was sold under the Newcastle Thermal coal, 6000kCal index price in Q3 2022.

I believe the market is misunderstanding the value of Yancoal's reserves, and its ability to generate higher returns through its "hard wash" strategy.

DISC - HELD.

Chinese authorities are said to be considering a partial end to the Australian coal ban

News article here