The coal market in 2026 experienced a remarkable value reassessment during the third quarter. The price of 5,500 kcal thermal coal at Qinhuangdao climbed modestly from the start of the year, then averaged 882 yuan per ton in the third quarter with a year-on-year increase exceeding thirty percent, and even briefly broke through the 1,000 yuan mark in October. Against this industry backdrop, Yankuang Energy (01171) released its third-quarter report. The company recorded revenue of 117.504 billion yuan (RMB, same below) for the first three quarters, up 11.33% year-on-year; net profit attributable to shareholders of the listed company reached 11.117 billion yuan, up 55.95% year-on-year; non-recurring net profit was 8.544 billion yuan, up 31.07% year-on-year, with basic earnings per share of 1.11 yuan. In the third quarter alone, net profit attributable to shareholders was 3.968 billion yuan, a sharp year-on-year increase of 73.28%. The profit growth rate significantly outpacing revenue growth indicates that this is not simple scale expansion but high-quality growth driven by improved profitability, with the coal segment serving as the core driver of this round of results.

Price Increases and Cost Reductions Lift Coal Segment Gross Margin

From an industry perspective, the root of this round of price increases lies in the compounding of multiple supply-side constraints. Domestically, safety supervision affected major production regions from the beginning of the year through year-end, prompting more cautious coal mine operations, while annual approved capacity constraints and limited railway capacity for Xinjiang coal outward transport jointly restricted supply growth. On the import side, low water levels in Indonesian waterways limited barge transport, and some imported coal arrival costs exceeded selling prices, greatly diminishing importers' supplementary role. The direct consequence of supply contraction was a systemic elevation of the price center, but price increases were not evenly distributed: coking coal, being more market-oriented, was more sensitive to supply changes. In the third quarter, the price of main coking coal at Jingtang Port once held at a high range of 2,430 yuan per ton, with a year-on-year average price increase of approximately 58%, significantly stronger than thermal coal's roughly thirty percent gain. This structural feature of "strong coking coal, weak thermal coal" precisely constitutes the value of coal type structure optimization after the Kestrel delivery for Yankuang Energy, whose assets are primarily thermal coal.

In the view of the financial media, the quality of Yankuang Energy's report card is first reflected in the volume-price dynamics of its core coal business. On the production side, the company continued its capacity layout of "stabilizing within the province, expanding outside the province, and optimizing overseas," with commercial coal output of 131.791 million tons in the first three quarters, down 3.02% year-on-year, still at a historically high level despite the decline. More noteworthy is the sales side: commercial coal sales volume during the same period was 126.030 million tons, down only 0.32% year-on-year, a decline significantly smaller than the production decline. Output contracted while sales volume remained essentially stable, indicating that the company used inventory adjustments and traded coal supplementation to minimize the impact of stricter safety supervision on revenue, providing a solid sales foundation for profit realization.

Price-side elasticity came from both structural and operational support. The company's relatively low proportion of long-term contract coal and higher proportion of spot sales allowed it to more fully capture price increase benefits during the domestic and international coal price upturn. Meanwhile, through refined marketing tactics such as leading price increases while slowing declines, competitive bidding sales, and clean coal value creation, it seized market window opportunities. Reflected in results, the comprehensive average price of self-produced coal rose 16.8% year-on-year to 587.8 yuan per ton, and the coal and supporting industries generated 9.96 billion yuan in net profit attributable to shareholders, becoming the core support for performance.

Cost-side improvement also deserves closer examination. Facing rigid increases in diesel, labor, and other element prices in Australia, the company offset additional expenditure through centralized procurement, workforce optimization, and performance assessment constraints. Third-quarter per-ton coal sales cost dropped to 332.7 yuan per ton, down 5.7% quarter-on-quarter, while self-produced coal costs decreased 2.6% year-on-year and 9.0% quarter-on-quarter. The "scissors gap" formed by rising selling prices and falling costs directly amplified per-ton coal gross margin space, which is the direct reason for the coal segment's gross margin improvement and profit growth far exceeding revenue growth. This simultaneous occurrence of "price increases" and "cost reductions" means the coal segment's profit quality does not rely solely on one-sided market coal price increases but is compounded by genuine improvements in internal operational efficiency.

The financial structure was also optimized in tandem: as of the end of the third quarter, the debt-to-asset ratio dropped to 60.8%, down 1.5 percentage points from the beginning of the year; net cash flow from operating activities was 25.486 billion yuan, up 29.76% year-on-year, with cash flow growth broadly matching profit growth, indicating solid cash content in earnings. From a business structure perspective, the chemicals and power segments showed divergence. The comprehensive price of chemical products in the first three quarters was 3,180 yuan per ton, up 10.5% year-on-year, continuing price-side improvement. The power segment's average electricity selling price was 0.36 yuan per kilowatt-hour, down 6% year-on-year, with power business profitability somewhat squeezed as rising coal prices pushed up fuel costs. This divergence does not change the overall pattern of the coal main business providing support, but it does suggest that the hedging effect of coal-power integration during coal price upturn cycles still requires time to verify.

Kestrel Coal Mine Completes Delivery, Upgrading Both Coal Type and Output

If the third-quarter results represent the present already in hand, then the Kestrel coal mine delivery represents a clearly visible future. On October 1, 2026, Yancoal Australia completed the acquisition of 100% equity interest in Kestrel Group, indirectly obtaining 80% interest in the Kestrel coal mine. The upfront cash consideration of 1.85 billion US dollars was paid to the counterparty's designated account, and Yancoal Australia confirmed its attributable share of Kestrel coal mine production and economic benefits from the delivery date. This timing falls precisely after the third-quarter reporting period ended, meaning Kestrel's contribution has not yet entered any page of the first three quarters' financial statements but will be fully presented in fourth-quarter and 2027 results.

The significance of the Kestrel coal mine does not lie in simple output addition. This mine, located in the Bowen Basin of Queensland, is one of Australia's largest underground metallurgical coal mines, primarily producing high-quality hard coking coal. The company's announcement clearly stated that the Kestrel coal mine will contribute high-quality metallurgical coal, helping Yancoal Australia achieve scale expansion and strengthen diversified layout. Yankuang Energy's previous coal assets were dominated by thermal coal, with relatively single price cycle exposure; after the injection of Kestrel's hard coking coal assets, metallurgical coal's weight in the overall product portfolio rises. Connecting to the earlier price structure analysis — coking coal showed stronger elasticity than thermal coal during the year — Kestrel brings not only volume increment but also structural upgrading of price elasticity. Meanwhile, the company's reserve projects extend beyond Kestrel, with Wucaiwan No. 4, Youfanghao, and other new mines under continuous construction, which will hedge against safety supervision impacts and support medium-to-long-term capacity release.

Summary

Placing the third-quarter report and Kestrel delivery side by side, Yankuang Energy's current picture is already clear: the first three quarters' profit growth validated the company's ability to realize profits as a thermal coal leader during the coal price upturn cycle, while Kestrel's consolidation injects quantifiable, trackable external growth into the fourth quarter and beyond. The sustainability of high coal prices certainly carries uncertainties. By late October, thermal coal prices had already seen a slight pullback, and the coking coal market also entered weak oscillation, with short-term supply-demand dynamics still playing out. But even if the price center retreats modestly from current levels, Kestrel's output and coal type structure improvements will still constitute an independent growth source, while the company's existing high-dividend tradition provides another layer of safety cushion for valuation. In this sense, Yankuang Energy's focus in the fourth quarter of 2026 is no longer merely "how much more coal prices can rise" but "whether the coal price and M&A lines can form resonance." Judging from the profit realization in the third-quarter report and the on-schedule Kestrel delivery, the answer is leaning toward the affirmative side.