Yancoal Australia Ltd

Income statement: notes and sources

Sources: Revenue FY2024–25 from FRA FY2025 (primary). Other lines from SA standardised data (aggregator), cross-checked to the primary FY2025 revenue (A$5,949m) and FY2025 pre-tax profit (A$623m per Yankuang/HKEX summary). EPS is derived from NPAT / ~1,320m shares. Diluted EPS is not materially different (minimal dilutive instruments; not separately disclosed in the documents reviewed). The company-defined Operating EBITDA differs from the standardised figure: A$2,579m in FY2024 and A$1,437m in FY2025 (FRA FY2025).

Margins

Calculated from 6.1. Revenue CAGR FY2021–FY2025 is about +2.4% p.a. This figure is distorted by the FY2022 price spike: revenue fell at roughly −17% p.a. from the FY2022 peak to FY2025.

Commentary. The five-year profile follows a full commodity cycle. FY2021 was the post-COVID recovery. FY2022 brought extreme pricing after the Russia–Ukraine shock, when NEWC benchmarks exceeded US$400/t and the gross margin reached ~70%. From FY2023 to FY2025 prices normalised. The key inflection in FY2025 was that record volumes (38.6Mt attributable) could not offset a 17% fall in the A$ realised price, so operating EBITDA dropped 44% (FY2025 webcast). Cost of revenue was broadly flat in absolute terms. Cash operating costs in 2025 were about A$1/t lower than in 2024 (webcast), yet the implied operating cash margin compressed to A$39/t. Interest expense has fallen from A$207m to A$7m, reflecting full debt retirement by 2023. That trend reverses in FY2026–27 as the US$1.2bn Kestrel acquisition facility is drawn.

Balance sheet

Sources: FRA FY2025; Yankuang HKEX summary (25 Feb 2026); FilingReader summary of HYR 1H2026; 4Q25 QAR (A$2.13bn closing cash); 2Q26 QAR (A$2.01bn). Yancoal held no interest-bearing loans at 31 December 2025 (FRA FY2025).

Post-balance-date change (material): At Kestrel completion on 1 October 2026, US$1.85bn was paid in cash, part funded by an initial drawdown of the five-year syndicated US$1.2bn acquisition loan facility. A US$200m working-capital facility remained undrawn (completion announcement, 1 Oct 2026). Yancoal will therefore show net debt or sharply reduced net cash at 31 December 2026 for the first time since 2022. The exact drawn amount is not publicly disclosed. Contingent consideration of up to US$550m is payable over five years, linked to benchmark prices.

Cash flow: notes and sources

Sources: AR2025 (capex A$751m); FRA FY2025 (A$769m returned in 2025: 2024 final A$0.52/sh = A$687m plus 2025 interim A$0.062/sh = A$82m). Buybacks: none. Neither Yancoal nor its subsidiaries purchased, sold or redeemed its securities in 1H2026 (HYR 1H2026).

Ratios (FY2025, calculated)

1H2026 interim performance (HYR 1H2026). Revenue was A$3,024m (+13%) and operating EBITDA A$767m (+29%). Operating profit was A$328m (+42%) and adjusted EBIT A$325m (vs A$212m). Statutory NPAT was A$17m (−90%), after A$272m of non-operating items, including A$188m related to USD-denominated loans (the FX translation impact around Kestrel financing). Adjusted NPAT was A$73m (−55%). Cash operating cost was A$96/t (+3%), with diesel the key pressure. The interim dividend was A$0.07/share (A$92m), paid 18 September 2026.

Management guidance (2026, excludes Kestrel).

• Production: 36.5–40.5Mt attributable saleable, upper half expected, with a full-year record targeted.

• Costs: A$90–98/t, upper half expected.

• Capex: A$600–750m.

• Kestrel contributes from 1 October 2026; 2027 guidance is expected with the FY2026 results (February 2027).

Directionally, 2H26 earnings benefit from the realised price recovery (2Q26 A$160/t versus A$142/t a year earlier), record volumes and one quarter of Kestrel. These are offset by interest costs and FX on USD debt.

Bull case.

1. Kestrel transforms the mix. Premium HCC with about 5.9Mt (100%) of annual output adds higher-margin met exposure at a price below the 2018 transaction value, and the contingent consideration shares price risk with the vendors.

2. Volume momentum. Record output in 1H26 and a record quarter, plus HVO life to 2045, underpin a multi-decade production base.

3. Valuation and yield. An EV/EBITDA of about 3x and P/B below 1x leave substantial re-rating potential if coal prices hold, while the dividend floor guarantees distribution.

Bear case.

1. Thermal price exposure. 2025 showed that record volumes cannot protect earnings: a 17% fall in price produced a 64% fall in NPAT.

2. The balance-sheet regime has changed. A net-cash company becomes leveraged in USD, and statutory earnings become FX-volatile (A$188m in 1H26).

3. Regulatory cliff risk. Without federal EPBC approval by 31 Dec 2026, HVO North's continuity is at risk. Climate conditions may also constrain marketing flexibility.

Key catalysts and monitorables (next 12 months).

• 3Q26 QAR (19 Oct 2026): progress on the production record and first Kestrel commentary.

• Federal EPBC decision on HVO by 31 Dec 2026.

• 4Q26 QAR (Jan 2027) and FY2026 results (late Feb 2027): first Kestrel earnings, final dividend, 2027 guidance and leverage metrics.

• The coal price path (NEWC, API5, PLV HCC) and A$/US$.

• Trends in Chinese and Indian import policy.

• Safety (TRIFR) and Ashton closure provisioning.

• Any further M&A, such as Anglo met assets or Moolarben residuals.

Analyst verdict.

Yancoal enters late 2026 at a strategic inflection point. Operationally the business has rarely been stronger. It set a production record in 2025, a first-half record in 2026 and a record second quarter. Management attributes these gains to equipment reliability and its Key Tasks program, and expects a further full-year record. Cost control has been creditable against diesel inflation, and capital intensity is falling. Financially, however, 2025 exposed the limits of volume as a defence. Thermal coal pricing determines Yancoal's earnings, and with 84% of sales in thermal products, a 17% fall in realised price cut operating EBITDA by 44% and NPAT by 64%.

The Kestrel acquisition is management's answer, and in our view a sound one strategically. It buys a long-life, premium metallurgical asset adjacent to existing Queensland operations. The upfront price is below the 2018 transaction value, and a contingent structure pays out only in strong markets. It also lifts met exposure to about 22% and reorients the customer base toward India's growing steel sector. The cost is the end of Yancoal's net-cash era. USD-denominated borrowings introduce FX volatility into statutory earnings, as the A$188m first-half hit demonstrated, and interest expense will reappear.

The near-term swing factor is regulatory. NSW approval of HVO to 2045 is a major de-risking, but the federal deadline of 31 December 2026 must be cleared. Governance remains the persistent discount factor: a controlled board, a 38% free float and parent-centric decision-making. The constitutional dividend floor, though, provides an unusual degree of shareholder protection.

On balance, Yancoal looks inexpensive on asset and cash-flow metrics. It is best viewed as a leveraged, cash-yielding play on Asian coal demand with improving product mix. Investors should size positions to coal price conviction and watch three things closely: Kestrel's early performance, the HVO federal decision and the trajectory of post-acquisition leverage.

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Primary sources referenced: Yancoal ASX/HKEX releases — CEO transition (14 Jan 2025), CEO appointment (26 Aug 2025), Moolarben completion (3 Oct 2025), 3Q25/4Q25/1Q26/2Q26 QARs, FY2025 Financial and Production Results (25 Feb 2026), Annual Report 2025 (23 Apr 2026), Kestrel announcement (14 Apr 2026) and completion (1 Oct 2026), Half-Year Financial Report 1H2026 (19 Aug 2026), Interim Report (24 Sep 2026), 2026 Company Factsheet; FY2025 results webcast notes; NSW IPC / Glencore release on HVO (30 Sep 2026). Secondary: StockAnalysis, InvestSmart, Yahoo Finance, Simply Wall St, companiesmarketcap.com, Argus Media, Shanghai Metals Market, Mining Weekly, The Motley Fool Australia, FilingReader.