External broker reports(aggregated public sources), CMB International

CMB International

External broker reports(aggregated public sources)

Incorporated in Hong Kong, supported by the mainland and targeting in global market, CMB International Capital Corporation Limited (“CMBI”) is an integrated financial institution providing comprehensive and professional services. As a wholly-owned subsidiary of China Merchants Bank ("CMB"), by leveraging on the Group’s synergy and coordination in domestic and overseas markets, as well as CMB’s strong resources and outstanding social reputation, CMBI and its subsidiaries have been actively implementing diversified business strategies and set up an overall layout of main business segments including Corporate Finance, Asset Management, Wealth Management, Global Markets and Structured Finance, etc. Adhering to the philosophy of “being clients oriented and increasing our own values by the way of creating value for clients”, CMBI endeavors to provide quality and integrated financial services to institutional, corporate and individual customers both domestic and overseas including Hong Kong IPO sponsorship and underwriting, share placement and rights issue for listed companies, financial advisors, bonds issuance services, asset management, direct investment, wealth management, equity sales and trading, etc.

Equity Bottom-Up

<ul><li>YAL’s reported net profit in 2022 came in A$3.6bn, up 3.5x YoY but still 20% below our forecast.</li><li>The miss was due to a higher-than-expected unit cost and a one-off unwind of discount recognised (A$279mn) due to early repayment of debt.</li><li>Stripping out the one-off item, the net profit would be A$3.87bn (only 14% below our forecast). </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

YAL’s reported net profit in 2022 came in A$3.6bn, up 3.5x YoY but still 20% below our forecast.The miss was due to a higher-than-expected unit cost and a one-off unwind of discount recognised (A$279mn) due to early repayment of debt.Stripping out the one-off item, the net profit would be A$3.87bn (only 14% below our forecast). Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal Australia (3668 HK) – Net Profit +3.5x YoY in 2022 but Below Expectations

<ul><li>Yancoal confirmed this morning that a coal price cap advised by the New South Wales (NSW) Government will be effective for 15 months (1 Apr 2023 to 30 Jun 2024).</li><li>Yancoal is compelled to make available up to 310k tonnes of coal per quarter to domestic power plants.</li><li>We estimate this will translate into 3.0%/1.7% pretax earnings impact in 2023E/24E, which we think is not significant. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal confirmed this morning that a coal price cap advised by the New South Wales (NSW) Government will be effective for 15 months (1 Apr 2023 to 30 Jun 2024).Yancoal is compelled to make available up to 310k tonnes of coal per quarter to domestic power plants.We estimate this will translate into 3.0%/1.7% pretax earnings impact in 2023E/24E, which we think is not significant. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal Australia (3668 HK) – Confirmation of Price Cap and Volume to Remove Overhang

<ul><li>Yancoal achieved thermal coal ASP of A$430/t in 4Q22 (+121% YoY) which is higher than API5 price (the major benchmark of 5500kCal; +32% YoY).</li><li>This is the second quarter that Yancoal successfully beat the benchmark through effective coal sales strategy.</li><li>This strong ASP helped offset the weak attributable coal sales (-30% YoY) as a result of rain disruptions, taking the revenue up 41% YoY in 4Q, based on our calculation.</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal achieved thermal coal ASP of A$430/t in 4Q22 (+121% YoY) which is higher than API5 price (the major benchmark of 5500kCal; +32% YoY).This is the second quarter that Yancoal successfully beat the benchmark through effective coal sales strategy.This strong ASP helped offset the weak attributable coal sales (-30% YoY) as a result of rain disruptions, taking the revenue up 41% YoY in 4Q, based on our calculation.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal Australia (3668 HK) – Thermal ASP in 4Q continued to beat benchmark

<ul><li>We are surprised that Yancoal achieved thermal coal ASP growth of 226% YoY (39% QoQ) in 3Q22, which is way above the API5 price (the major benchmark of 5500kCal; 118% YoY; 6% QoQ).</li><li>This suggests good management execution. Yancoal maintains the full year saleable production guidance of 31-33mn tonnes and unit cash cost of A$84-89/t (excluding royalties).</li><li>While the volume target is challenging, we expect it will be more than offset by a strong coal price in 4Q22E. </li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We are surprised that Yancoal achieved thermal coal ASP growth of 226% YoY (39% QoQ) in 3Q22, which is way above the API5 price (the major benchmark of 5500kCal; 118% YoY; 6% QoQ).This suggests good management execution. Yancoal maintains the full year saleable production guidance of 31-33mn tonnes and unit cash cost of A$84-89/t (excluding royalties).While the volume target is challenging, we expect it will be more than offset by a strong coal price in 4Q22E. Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal Australia (3668 HK) – 3Q Thermal Coal ASP Way Above Benchmark

<ul><li>We are encouraged by Yancoal’s decision to repay US$1bn (~A$1.56bn) of debt in advance. We estimate the interest cost savings will increase net profit in 2022E/23E/24E by 0.3%/1%/1%.</li><li>Most importantly, it will significantly reduce the potential risk arising from the strong US$ and interest rate hike.</li><li>We estimate the prepayment will not hinder Yancoal from achieving 50% dividend payout ratio this year, given the strong free cash flow (~A$4bn based on our estimate).</li></ul>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

We are encouraged by Yancoal’s decision to repay US$1bn (~A$1.56bn) of debt in advance. We estimate the interest cost savings will increase net profit in 2022E/23E/24E by 0.3%/1%/1%.Most importantly, it will significantly reduce the potential risk arising from the strong US$ and interest rate hike.We estimate the prepayment will not hinder Yancoal from achieving 50% dividend payout ratio this year, given the strong free cash flow (~A$4bn based on our estimate).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Yancoal Australia (3668 HK) – Further risk reduction after prepayment of US$1bn debts

Australia

Yancoal Australia Ltd. is a prominent Australian coal mining company engaged in the exploration, development, production, and marketing of metallurgical and thermal coal. It supplies thermal coal for electricity generation and metallurgical coal for steel manufacturing to international markets, primarily in the Asia-Pacific region. The company was founded in 2004 and is headquartered in Sydney, Australia.

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Yancoal Australia (3668 HK)