ASX:YAL
Yancoal Australia Ltd
Investment Summary
The fund managers believe that Yancoal Australia Ltd (YAL) presents a strategic opportunity in the thermal coal sector, particularly given their impressive unit cost control and robust cash position, which increased to $430 million in the recent quarter. In their opinion, YAL's potential acquisition of Anglo coal assets could add 13.5 million tonnes to production, although increased competition may hinder this. Should YAL not secure the assets at an attractive price, the managers expect the surplus cash to be returned to investors via a special dividend, creating a favorable scenario for shareholders. Additionally, YAL's recent performance, including a 5.2% rise in shares, and a fully franked dividend of 52 cents, highlights the company's ability to generate substantial free cash flow, even amidst market fluctuations. While thermal coal price declines briefly affected sentiment, the fund managers remain optimistic about YAL’s potential returns for investors.
Commentary From The Managers
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.
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.
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.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.