Fund Manager Summary
The fund managers believe the outlook for Yancoal Australia Ltd remains positive, presenting a significant opportunity for investors. In their opinion, the company’s strong focus on thermal coal exposure over metallurgical coal positions it favorably in the market. Yancoal's impressive unit cost control has enhanced its cash reserves, which increased by $430m in the September quarter. Fund managers see Yancoal as a strong contender for acquiring the Anglo coal assets currently for sale, potentially adding 13.5 million tonnes to their portfolio. If the acquisition does not materialize at the right price, there is an expectation that the cash will be returned to shareholders through a special dividend, creating a win-win scenario for investors.
Source: Trading View
Commentary From The Managers
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BKI Investment Company
30 June 2025
$5.77
Summary
- BKI Investment Company continues to monitor Yancoal Australia Ltd's performance closely.
- Position reduction: The fund has reduced its position in Yancoal Australia.
- Dividend halt: Yancoal has halted their interim dividend for the six months ending 30 June 2024.
- Cash preservation: The board's decision aims to preserve cash for potential corporate initiatives.
- Future acquisitions: The focus includes the acquisition of new coal assets.
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Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
BKI Investment Company
30 June 2025
$5.77
- BKI Investment Company continues to monitor Yancoal Australia Ltd's performance closely.
- Position reduction: The fund has reduced its position in Yancoal Australia.
- Dividend halt: Yancoal has halted their interim dividend for the six months ending 30 June 2024.
- Cash preservation: The board's decision aims to preserve cash for potential corporate initiatives.
- Future acquisitions: The focus includes the acquisition of new coal assets.
Summary
Endeavor Asset Management
31 Mar 2025
$5.06
- Endeavor Asset Management sold their investment in thermal coal miner Yancoal (YAL) due to market conditions.
- Yancoal generated substantial free cash flow from strong commodity prices.
- The Company rewarded shareholders with a fully franked dividend of 52 cents.
- This dividend delivered a yield of 8.1% on the average cost base, or 11.6% grossed up.
- A decline in thermal coal prices negatively impacted stock sentiment, causing a pullback in share price.
- Endeavor Asset Management exited the position at a small loss.
Summary
Oracle Advisory Group
31 Mar 2025
$5.06
- Yancoal has a history of robust cash generation.
- Previously consistent dividend payer with yields between 15-25% until August 2024.
- Withholding of dividends occurred to pursue an acquisition of Anglo American’s coal mines.
- Opportunity arose after the failed acquisition led to a stock sell-off.
- Thesis validated as dividends resumed in February with a payout of 52 cents per share (8% yield).
- If this payout level continues biannually, potential for mid-to-high teens yields emerges.
- This positions Yancoal as a compelling income and value play.
Summary
Endeavor Asset Management
31 Dec 2024
$6.50
- Shares in Yancoal Australia Ltd. (YAL) rose 5.2% during the month.
- Market discussions focused on the sale of Anglo Coal assets.
- Increased competitive tensions suggest YAL is less likely to win the bidding.
- This development is favorable for shareholders.
- YAL’s substantial cash reserves may be distributed as surplus capital.
- Endeavor Asset Management continues to hold its position in YAL.
Summary
Paradice Investment Management
31 Dec 2024
$6.50
- Paradice Investment Management met with Yancoal Australia Ltd (YAL) to discuss methane emissions management and compliance with the safeguard mechanism.
- Focus on understanding potential impacts of changes in measurement methodologies for fugitive methane emissions on safeguard mechanism liabilities.
- Challenges identified in reducing fugitive methane emissions due to site-specific geology and mining type.
- Yancoal is actively working on reducing other emissions sources it can control.
- The company is exploring options to generate its own carbon credits.
Summary
Endeavor Asset Management
31 Oct 2024
$6.52
- Endeavor Asset Management has shifted coal exposure to Yancoal (YAL) due to a preference for thermal coal over metallurgical coal.
- Yancoal has demonstrated impressive unit cost control, resulting in a cash balance increase of $430m in the September quarter.
- The company is a strong contender for acquiring the Anglo coal assets currently up for sale.
- Yancoal has strategically set aside cash for this potential acquisition, which could add another 13.5 million tonnes of resources.
- If YAL does not secure the assets at a favorable price, there is an expectation for cash to be returned to shareholders via a special dividend.
- This scenario presents a win-win for shareholders.
Summary
Oracle Advisory Group
30 Sept 2024
$6.13
- Yancoal is one of the largest coal miners in Australia with operations in the Hunter Valley and Queensland.
- The coal industry faces a supply/demand mismatch, with developed countries phasing out coal while demand from developing countries like China and India increases.
- Global coal consumption has reached record levels, keeping prices elevated compared to historical averages.
- During August, Yancoal reported a strong performance with $565 million of free cash flow in the first half of 2024.
- The company’s cash balance increased by 43% to $1.55 billion.
- Yancoal surprised shareholders by announcing no dividend for the half, impacting investor sentiment.
- The decision to withhold dividends is linked to Yancoal's potential acquisition of Anglo American’s coal mines, which could enhance their portfolio.
- The acquisition targets are metallurgical coal mines, increasing exposure beyond Yancoal's current thermal coal production.
- Yancoal has the cash resources to pursue these acquisitions, making it competitive against other interested companies.
- If the acquisition bid is unsuccessful, there is a possibility of returning cash to shareholders in the form of dividends.
- Oracle Advisory Group continues to hold Yancoal, believing the initial market reaction to be overblown and the company appears very attractively priced.
Summary
Contract Asset Management
31 Aug 2024
$5.61
- Yancoal Australia is focusing on M&A as a key strategy for growth.
- Contract Asset Management is disappointed by the Board's decision to abandon the dividend in the near term.
- Continued monitoring of Yancoal's strategic initiatives is essential.
- Contract Asset Management remains engaged with Yancoal's performance and future plans.
Summary
Contract Asset Management
30 June 2024
$6.92
- Contract Asset Management remains bullish on coal due to tight supply and lack of new investment.
- Increasing demand for energy and electricity is evident, particularly in the U.S., driven by AI, data centers, and clean-tech manufacturing.
- A recent article highlights that the transition to renewables will take longer than anticipated, with renewables unable to meet current power demands.
- Concerns are rising about the power grid's capacity to support new energy needs, causing delays in coal plant closures in several U.S. states.
- Australia is witnessing similar trends, as evidenced by the delay in closing the Erarang coal-fired power plant.
- Countries like India and China continue to build coal-fired power plants and increase steel production, relying on Australian coal.
- Over 80% of world energy is still produced by fossil fuels, with only a 4% drop over the past 15 years.
- The investment case for coal companies remains strong, supported by a favorable demand/supply equation, single-digit P/E multiples, and double-digit dividend yields.
- Despite recent price retreats, the cash generation from coal remains substantial.
Summary
Contract Asset Management
31 Jan 2024
$5.99
- Contract Asset Management has increased its investment in Yancoal Australia Limited (YAL), making it a top 5 holding.
- YAL is a leading Australian coal producer in the global seaborne market, offering premium thermal, semi-soft coking, and PCI coals for export.
- YAL is generating significant cash flow, adding almost $500 million to its cash balance in the December quarter.
- The company currently holds $1.4 billion in cash and has paid out $1.4 billion in dividends over the past twelve months.
- YAL met its production guidance for the year, producing over 33 million tonnes of saleable coal.
- Supply and demand in the thermal and metallurgical coal markets appear well balanced.
- While coal prices have decreased from record highs, they remain above operating cash costs.
- Contract Asset Management views YAL as extremely cheap, with a P/E multiple of just 3.5x.
- The company is expected to continue offering compelling fully-franked dividends, with a current expected dividend yield of over 15%.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"Investors might find that Yancoal is poised at a crossroads—whether it’s through strategic acquisitions or returning cash to shareholders, the potential for value creation seems promising, especially with its solid cash position and cost control. The future looks intriguing for YAL."
Last Updated: 30 Jun 2025
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Frequently Asked Questions
Who is investing in Yancoal Australia Ltd (ASX:YAL)?
Fund managers including Endeavor Asset Management, Oracle Advisory Group, Contract Asset Management, Paradice Investment Management and BKI Investment Company have invested in Yancoal Australia Ltd (ASX:YAL).
Why do fund managers invest in Yancoal Australia Ltd?
Fund managers are investing in Yancoal Australia Ltd due to its strong cash management, with a recent increase of $430 million in cash reserves, and a strategic shift towards thermal coal. The company is well-positioned to potentially acquire Anglo coal assets, which could enhance production by 13.5 million tonnes. If the acquisition does not materialize at a favorable price, shareholders can expect a return of cash through special dividends, making it an attractive investment.
What happened to Yancoal Australia Ltd (ASX:YAL)?
There have been no recent updates from fund managers regarding Yancoal Australia Ltd although fund managers including Endeavor Asset Management, Oracle Advisory Group, Contract Asset Management, Paradice Investment Management and BKI Investment Company have previously commented.