The Zhitong Finance App learned that Anxin International released a research report stating that it maintains Yankuang Australia's (03668) “buy” rating, with a target price of HK$33.37. The bank believes that the company's operating data for the whole year is in line with expectations and guidelines. The price of coal was relatively stable in the second half of last year, and the company is expected to further increase production in 2024 to contribute to the company's growth. The company's 2023/2024 EPS forecast is 1.44/1.15 Australian dollars, respectively.

Incident: The company released an operating report for the fourth quarter. The average price of coal in the fourth quarter was 196 Australian dollars/ton, of which the average sales price of thermal coal was 180 Australian dollars/ton, and the average sales price of metallurgical coal was 292 Australian dollars/ton. Equity coal sales volume is 10.1 million tons, including 8.7 million tons of thermal coal and 1.4 million tons of metallurgical coal. The annual coal sales price was 232 Australian dollars/ton, down 39% year on year; annual coal equity sales were 33.1 million tons, up 13% year on year.

The report's main points are as follows:

Coal sales in the fourth quarter recorded a sharp increase over the same period last year, and operations were in line with expectations.

The company's coal production resumed quarterly growth in 2023. Q4 coal equity production was 9.7 million tons, up 4% month-on-month, up 47% year-on-year; equity sales were 10.1 million tons, up 17% month-on-month and 46% year-on-year. The company's Q4 equity sales volume was 400,000 tons higher than equity production, reducing the inventory accumulated in the previous period. Annual coal sales volume was 33.1 million tons, an increase of 13% over the previous year, falling in the middle of 31-36 million tons at the beginning of the year, completing the annual guidelines. Company Q4 supplies 220,000 tons of coal to power plants in NSW. The NSW coal reserve policy lasts 15 months from April 1, 2023 to June 30, 2024.

Prices ran smoothly in the fourth quarter, and sales prices for the whole year were in line with this forecast.

The company achieved an average coal sales price of 196 Australian dollars/ton in the fourth quarter, down 1% from the previous quarter, which is relatively stable. The average price of the API5 index in the fourth quarter was 96 US dollars/ton, up from 88 US dollars/ton in the third quarter of 2023; the GCNewc index was 136 US dollars/ton, down from 149 US dollars/ton in the third quarter. The company's annual coal sales price is 232 Australian dollars/ton, which is in line with this forecast. Coal prices are expected to remain relatively stable in the first quarter of next year.

Cash operating costs are expected to be in the middle of the guidelines.

The company's annual operating cost guideline is 92-102 Australian dollars/ton, and the estimated annual cost is in the middle of the guideline. Cash operating costs for the first half of 2023 were 109 Australian dollars per ton, an increase of 27 Australian dollars/ton over the previous year, which is comparable to 107 Australian dollars/ton in the second half of last year. The limited recovery measures implemented by the company at the beginning of last year created momentum for the second half of the year and achieved outstanding results. The recovery in production in the second half of the year continued to reduce the company's cash operating costs. It is expected that in 2024, the company will continue to work to maintain production levels for the fourth quarter of 2023.

The dividend policy attracts.

The company previously announced a dividend policy of paying no less than 50% of net profit after tax (excluding non-recurring items) or 50% of free cash flow (excluding non-recurring items) in each fiscal year under normal circumstances. The bank sees this dividend policy as attractive and expects the company's dividend rate to reach 13.3% in 2023.

Risk warning: The macroeconomic downturn affects demand; coal prices fall rapidly; production is affected by weather or the epidemic; production costs rise further; coal mine accidents; risk of possible asset depreciation; and ESG policies affect the industry.