Introduction to this report:

The performance was in line with expectations. Australian production rose strongly in Q3, leading to year-on-year improvements in production and sales, the month-on-month increase in coal prices and continuous optimization of superimposed costs, and the month-on-month increase in Q3 ton sales price and gross profit exceeded expectations.

Key points of investment:

Maintain an “Overweight” rating. The company achieved revenue of 106.633 billion yuan/ -21.03% in the first three quarters of 2024, and net profit of 11.405 billion yuan/ -26.54% to mother. The third quarter achieved revenue of 34.321 billion yuan/-32.22% /month-on-month +5.03%, and net profit to mother of 3.837 billion yuan/YoY -27.81% /month-on-month +0.66%, in line with expectations. Considering the strong recovery in the company's production and sales, the company's 24-26 EPS forecast was raised by 1.60/1.78/1.98 (+0.07/+0.11/+0.16) yuan. According to the comparable company's 2024 average of 11.47x PE, the target price was raised to 18.31 (+1.23) yuan.

Q3 Australian production rose strongly, leading to a year-on-year improvement in production and sales. In the first three quarters, commercial coal production was 0.106 billion tons/ +8.75%, commercial coal sales were 0.101 billion tons/ +2.18%, and self-produced coal sales were 0.096 billion tons/ +8.27%. Among them, Q3 commercial coal production was 36.73 million tons/year on year +9.81% /month on month +6.65%, commercial coal sales were 33.46 million tons/year on year +0.68% /month on month -8.6%, and self-produced coal sales volume was 31.85 million tons/year on year +6.87% /month on month -2.48%. We believe that the recovery in production and sales in Q3 was mainly affected by a strong rise in Australian production. There were year-on-year improvements, compounded by a rise in production capacity in Yingpan and Shilausu, causing the company's production to rise against the trend. Looking ahead to Q4, we believe that Yancoal's production in Australia continues to recover. It is expected that Q4 will remain flat compared to Q3, and superimposed construction capacity will continue to be released. Yankuang Energy's Q4 production is expected to remain flat and increase slightly compared to Q3.

The month-on-month increase in coal prices combined with continuous cost optimization, and the month-on-month increase in sales price and gross profit in Q3 exceeded expectations. The comprehensive sales price of tons of coal in the first three quarters was 683 yuan/ton, down 158 yuan/ton (-19%) year on year; ton cost was 379 yuan/ton, down 66 yuan/ton (-15%) year on year; gross profit per ton was 304 yuan/ton, down 92 yuan/ton (-23%) year on year. Among them, the comprehensive price of Q3 tons of coal was 680 yuan/ton, down 201 (-23%) year on year, up 12 yuan/ton (+17%); ton cost was 356 yuan/ton, down 107 yuan/ton (-23%) year on year, down 21.3 yuan/ton (-5.6%) month on month; gross profit per ton was 342 yuan/ton, up 40 yuan/ton (+13%) month on month.

The coal chemical industry is running steadily, and production and sales both increased dramatically in Q3. The company achieved a total of 6.355 million tons of coal chemical production in the first three quarters, a year-on-year decrease of 3.14 million tons; sales volume was 5.697 million tons, a year-on-year decrease of 0.198 million tons. The coal chemical sector achieved revenue of 18.708 billion, a year-on-year decrease of 5%, sales costs of 14.844 billion, a year-on-year decrease of 6%, and gross profit of the sector of 3.864 billion yuan, which was basically the same as the previous year, and the overall sector operated steadily. Among them, Q3's coal chemical products achieved a total output of 2.174 million tons/month on month +22.7%, and sales volume of 1.95 million tons/month on month +14.7%.

Risk warning: Coal prices fell beyond expectations; macroeconomic recovery fell short of expectations.