Investment Rating - The industry rating is "Positive" [1] Core Viewpoints - The report indicates that the negative impact from the mid-year report has been fully absorbed, and the fundamentals of the coal industry remain upward [1] - The coal sector has underperformed the CSI 300 index, with a decline of 0.74% compared to a 1.09% increase in the index, resulting in a relative underperformance of 1.83 percentage points [2] - Key monitored enterprises reported an average daily coal sales volume of 7.31 million tons, which is a week-on-week increase of 2.8% and a year-on-year increase of 4.7% [2] - The report highlights a decrease in coal inventory by 4% week-on-week, while year-on-year inventory has increased by 19.8% [2] Summary by Sections Coal Market Performance - The coal sector saw 6 stocks rise and 31 stocks fall during the week, with ST Dazhou showing the highest increase of 4.89% [2] - The average daily sales of thermal coal increased by 3.2% week-on-week, while coking coal sales rose by 1.9% [2] Price Trends - As of July 18, 2025, the price index for thermal coal (Q5500K) in the Bohai Rim was 663 RMB/ton, reflecting a week-on-week increase of 0.15% [3] - The price of coking coal at Jing Tang Port was 1420 RMB/ton, with a week-on-week increase of 8.4% [4] Investment Recommendations - The report suggests that social inventory continues to decline, and current demand remains promising, with domestic power plants showing a significant increase in daily coal consumption [6] - The report recommends focusing on high-dividend thermal coal companies and coking coal companies that are experiencing turnaround potential, such as China Shenhua, Shaanxi Coal, and others [6]

Core Viewpoint - China Shenhua (01088) shows a moderate increase in stock price, indicating cautious market sentiment among investors [1] Technical Analysis - As of July 18, the stock price is at HKD 32.25, with a rise of 1.25%. The price is above the 10-day moving average (MA10) of HKD 31.54 but fluctuates near the 30-day (MA30) at HKD 32.71 and 60-day (MA60) at HKD 32.22, suggesting a consolidation pattern [1] - The Relative Strength Index (RSI) is at 53, indicating a neutral zone, while a 5-day volatility of 5.3% reflects cautious trading behavior [1] - Key support is at HKD 31.1; if breached, it may drop to HKD 30.6. Resistance is at HKD 33.6, and a breakthrough could lead to a challenge at HKD 34.7 [1] - Technical indicators show mixed signals: MACD indicates a buy signal, while momentum oscillators suggest a sell signal, indicating an imminent market direction choice [1] - The probability of an upward movement is estimated at 54%, with the bull-bear power indicator turning to a buy signal, providing some hope for future performance [1] Derivative Instruments - For investors optimistic about China Shenhua's future, the Morgan Stanley call option (16502) is noteworthy, offering a leverage of 4.7 times with a strike price of HKD 36.6 and the lowest implied volatility in its category [3] - The Bank of China call option (16929) has a strike price of HKD 42.93 and a leverage of 5.8 times. UBS and Morgan Stanley bull certificates provide a leverage of 5.9 times, with redemption prices set at HKD 27 and HKD 27.2, suitable for risk-tolerant investors [3] - For cautious investors, the UBS bear certificate (53197) offers a leverage of 5.9 times with a redemption price of HKD 37, appropriate for those anticipating a potential pullback in China Shenhua's stock [3]

Group 1 - The core concept of the new "anti-involution" supply-side reform differs significantly from the 2016 supply-side reform, focusing on regulating low-price competition rather than eliminating backward production capacity [1] - The "anti-involution" strategy aims to stabilize the price bottom in the coal industry by reducing disorderly competition, which is expected to lead to a more pragmatic bottom in the current market [1][3] - The report recommends leading companies in the coal sector, including China Shenhua (601088.SH), Shaanxi Coal (601225.SH), China Coal Energy (601898.SH), and Jinkong Coal (601001.SH), as they are expected to benefit from the release of performance risks [1] Group 2 - The cement industry serves as a successful case of "anti-involution," where collaborative production cuts have led to a recovery in industry profitability, highlighting the challenges of implementing similar strategies in the coal sector [2] - The coal industry is currently at a fundamental turning point, with over 50% of coal enterprises reporting losses, particularly in coking coal, indicating a need for production cuts to stabilize prices [3] - The supply side has shown a significant decrease in production from April to May, with spontaneous production cuts occurring due to economic pressures, while demand has started to recover, suggesting a potential turning point for electricity consumption growth [3]

Core Viewpoint - The China Securities Index for domestic resources has shown positive performance, with a recent increase in value and significant year-to-date growth, indicating a favorable market trend for resource-related stocks [1]. Group 1: Index Performance - The China Securities Index for domestic resources rose by 0.29% to 3511.13 points, with a trading volume of 35.435 billion yuan [1]. - Over the past month, the index has increased by 1.37%, by 5.59% over the last three months, and by 5.12% year-to-date [1]. Group 2: Index Composition - The top ten holdings in the China Securities Index for domestic resources are: Zijin Mining (15.56%), China Shenhua (6.62%), China Petroleum (5.46%), China Petrochemical (4.52%), Northern Rare Earth (4.1%), Shaanxi Coal and Chemical (3.98%), China National Offshore Oil (3.32%), Luoyang Molybdenum (3.07%), China Aluminum (3.06%), and Shandong Gold (2.99%) [1]. - The index is primarily composed of the materials sector (68.47%) and the energy sector (31.53%) [2]. Group 3: Market Structure - The Shanghai Stock Exchange accounts for 78.58% of the index's holdings, while the Shenzhen Stock Exchange represents 21.42% [1]. - The index samples are adjusted biannually, with changes implemented on the next trading day following the second Friday of June and December [2]. Group 4: Related Funds - Public funds tracking the domestic resources index include Minsheng Jianyin China Securities Domestic Resources C and Minsheng Jianyin China Securities Domestic Resources A [3].

Group 1 - The core viewpoint of the news is that the China Hong Kong 300 upstream index has shown positive performance, with a 0.94% increase over the past month, an 18.02% increase over the past three months, and a 12.03% increase year-to-date [1] - The China Hong Kong 300 upstream index is composed of securities selected based on the China Securities Industry Classification, reflecting the overall performance of various thematic securities listed on the Hong Kong Stock Exchange [1] - The index has a base date of December 31, 2004, with a base point of 1000.0 [1] Group 2 - The top ten holdings of the China Hong Kong 300 upstream index include China National Offshore Oil Corporation (28.76%), PetroChina Company Limited (13.17%), Zijin Mining Group (10.73%), China Shenhua Energy Company (9.47%), Sinopec Limited (9.06%), China Hongqiao Group (4.45%), China Coal Energy Company (3.29%), Zhaojin Mining Industry Company (3.19%), Luoyang Molybdenum Company (2.74%), and Yanzhou Coal Mining Company (2.33%) [1] - The index's holdings are entirely composed of securities listed on the Hong Kong Stock Exchange, with a 100% allocation [1] Group 3 - In terms of industry composition, the China Hong Kong 300 upstream index has a significant allocation to oil and gas at 51.38%, followed by precious metals at 15.91%, coal at 15.56%, and industrial metals at 14.64% [2] - The index samples are adjusted semi-annually, with adjustments occurring on the next trading day after the second Friday of June and December each year [2] - Special circumstances may lead to temporary adjustments to the index, such as delisting of sample companies or corporate actions like mergers and acquisitions [2]

Investment Rating - The report maintains an "Accumulate" rating for China Shenhua [7][14] Core Views - The company is positioned as a leading beneficiary in the coal sector, with expected capacity increases in the future. The report suggests that the coal market has reached its bottom, with supply and demand expected to improve in Q2 2025, enhancing the investment value of Shenhua [2][14] - The forecast for the first half of 2025 indicates a net profit attributable to shareholders of 23.6-25.6 billion yuan, representing a year-on-year decline of 13.2%-20%. The second quarter's net profit is projected to be around 12.7 billion yuan, showing a quarter-on-quarter increase [14] - The report anticipates a recovery in coal demand and a decrease in costs, which will mitigate the impact of falling prices. In Q2, the company is expected to achieve coal production of 82.9 million tons and sales of 105 million tons, reflecting a 6.3% increase from Q1 [14] Financial Summary - Total revenue for 2023 is projected at 343.074 billion yuan, with a slight decrease of 0.4% year-on-year. The net profit attributable to shareholders is expected to be 59.694 billion yuan, down 14.3% from the previous year [4][15] - Earnings per share (EPS) for 2025 is forecasted at 2.49 yuan, with a gradual increase to 3.25 yuan by 2027. The report adjusts the EPS estimates downward for 2025-2027 [4][15] - The company’s price-to-earnings (P/E) ratio is projected to be 15.04 for 2025, with a target price set at 44.79 yuan, reflecting a slight decrease from previous estimates [14][16] Market Data - The stock has a 52-week price range of 35.35-43.60 yuan, with a total market capitalization of 744.473 billion yuan [8] - The company has a net asset value per share of 21.80 yuan and a price-to-book (P/B) ratio of 1.7 [9]

Core Viewpoint - The coal sector has experienced a significant rebound, driven by seasonal demand and the "anti-involution" policy aimed at stabilizing the market and promoting high-quality development [2][8]. Group 1: Market Performance - On July 14, the coal sector in the Hong Kong market rose by 3.79%, with China Shenhua H shares (01088) surging nearly 5% at one point, and related warrants increasing over 60% [1]. - The A shares of China Shenhua (601088.SH) also saw a rise of over 3%, while Zhengzhou Coal Electricity (600121.SH) hit the daily limit up during afternoon trading [1]. - As of June 30, the coal sector (Shenwan) had a decline of 12.29%, underperforming the CSI 300 index and ranking last among Shenwan industries [3]. Group 2: Supply and Demand Dynamics - The coal market is facing a supply-demand imbalance, with the China Coal Transportation and Marketing Association emphasizing the need for coal companies to understand market changes and adhere to long-term contracts [2]. - The average price of Qinhuangdao Q5500 thermal coal fell by 23% year-on-year, while the average price of coking coal at Jing Tang Port dropped by 39% [2]. - As of July 4, the average daily coal consumption of the six major power generation groups increased by 3.75% week-on-week, reaching an average of 84.27 million tons [7]. Group 3: Policy Impact - The "anti-involution" policy aims to reduce chaotic competition in the coal industry, with the government focusing on establishing rules to eliminate local protectionism and market segmentation [7][8]. - The recent meeting of the Central Financial Committee highlighted the need to address "involution-style" competition, which has further stimulated the coal sector's upward momentum [7][8]. Group 4: Investment Opportunities - Analysts suggest that the coal sector's rebound is supported by low valuations, high dividends, and potential transformation premiums, with a focus on companies like China Shenhua (01088, 601088.SH) and China Coal Energy (01898, 601898.SH) [9][10]. - The sector is expected to benefit from seasonal price increases due to rising demand amid supply constraints, with recommendations for stocks such as China Shenhua and Guanghui Energy [10]. - The coal industry is positioned at a triple support level of valuation, policy, and profit, making high-dividend leaders suitable for stable investment [11].

Summary of Conference Call Records Company Overview - The conference call discusses China Shenhua Energy Company, which operates in multiple sectors including coal, power generation, coal chemical, and transportation [1][2]. Key Financial Metrics - In 2024, the company achieved a revenue of 338.3 billion yuan, a year-on-year decrease of 1.4% [1]. - The net profit attributable to shareholders was 58.6 billion yuan, down 1.7% year-on-year [1]. - In Q1 2024, revenue was 69.5 billion yuan, reflecting a significant year-on-year decline of 41% compared to over 80 billion yuan in Q1 2023 [2]. - The total profit for Q1 2025 is projected to decline by 16.6% [4]. Coal Industry Insights - The coal price has significantly decreased, with the current market price falling below the production and sales costs, impacting overall performance [2]. - The production volume reached 327 million tons in 2024, a year-on-year increase of 0.8%, while sales volume was 459 million tons, supported by policy measures [2]. - The average spot sales price was 617 yuan per ton, down 1.8% year-on-year [3]. Cost and Profitability - The sales cost increased by 1.45% year-on-year, with self-produced coal costs remaining stable at 179 yuan per ton [3]. - The gross profit margin decreased by 2 percentage points to 30% [3]. - The transportation segment saw a decline in gross profit margins due to rising costs, with railway transport turnover increasing by 0.9% [5]. Power Generation Performance - The power generation segment showed resilience, with profits increasing by 2% in 2024, driven by a 5.3% increase in electricity consumption [4]. - However, Q1 2024 saw a decline in total power generation and consumption due to seasonal demand fatigue [4]. Future Outlook and Risks - The company is focusing on new projects in the coal and power sectors, with significant capital expenditures planned [7]. - The projected earnings per share (EPS) for 2025 to 2027 are estimated at 2.72, 2.80, and 2.77 yuan, respectively [8]. - Risks include macroeconomic uncertainties, insufficient domestic demand, and potential impacts from state-owned enterprise reforms [8]. Dividend Policy - The company declared a dividend of 2.26 yuan per share for 2024, with a payout ratio of 76.5%, reflecting a year-on-year increase of 1.3 percentage points [7]. Market and Policy Environment - The company is actively managing its market value and has room for growth despite current challenges [9]. - The credit rating for coal-related businesses remains high, indicating low default risk, although the sector is cyclical [10]. Conclusion - The conference call highlighted the challenges faced by China Shenhua Energy in the coal and power sectors, while also emphasizing the company's strategic focus on new projects and maintaining a strong dividend policy amidst a fluctuating market environment [11].

Investment Rating - The industry investment rating is "Positive" and maintained [9] Core Viewpoints - The report anticipates seasonal improvement in thermal coal demand due to high temperatures in July and August, which may lead to a short-term price recovery for thermal coal. The coal sector is currently underweight, with attractive dividend yields and defensive allocation value [2][25] - For coking coal, there is a rebound in prices driven by strong policy expectations and market sentiment, but the bargaining power of coking coal remains relatively weak in the black industry chain, limiting short-term upside potential [2][34] Supply Summary - Domestic coal production in June reached 42.107 million tons, a year-on-year increase of 3.0% and a month-on-month increase of 4.4%. The total coal production for the first half of the year was 240.5 million tons, up 5.4% year-on-year [6][14] - Coal imports in June fell to 33.04 million tons, a decrease of 25.93% year-on-year and 8.3% month-on-month. Cumulative imports for the first half of the year were 221.7 million tons, down 11.1% year-on-year [18][21] Demand Summary - In June, thermal power generation increased by 1.1% year-on-year and 7.0% month-on-month, with total domestic power generation reaching 796.3 billion kWh, up 1.7% year-on-year [24][27] - Non-electric coal demand, particularly in cement production, saw a decline, with June production at 15.547 million tons, down 5.3% year-on-year [29][33] - The steel sector showed a significant year-on-year decrease in production, with crude steel output in June at 8.318 million tons, down 9.2% year-on-year [33][38] Future Outlook - The report suggests that thermal coal prices may see further support due to seasonal demand increases and the current low inventory levels at power plants. Key factors to monitor include supply conditions, high-temperature weather, and sustained demand release [25][27] - For coking coal, while recent price rebounds are noted, the report indicates limited short-term upside due to weak bargaining power and strong expectations of a seasonal downturn [34][38]

Macro and Strategy - June financial data shows a significant rebound in credit, with new social financing reaching 4.20 trillion yuan, exceeding expectations of 3.71 trillion yuan, and new RMB loans at 2.24 trillion yuan, surpassing the forecast of 1.84 trillion yuan [8][9][10] - The M2 money supply grew by 8.3% year-on-year, indicating a recovery in domestic economic momentum as private sector balance sheet expansion improves [8][9] - The "seesaw effect" between government financing and corporate loans has weakened, suggesting a shift in credit dynamics as local governments approach their annual debt targets [9][10] Retail Industry - The jewelry market is projected to grow steadily, with the market size reaching 728 billion yuan in 2024, reflecting a compound annual growth rate of 3.6% since 2019 [11][12] - The top five companies in the jewelry sector hold a market share of 41.4%, indicating increasing industry concentration as consumer preferences shift towards quality and design [11][12] - The retail sector is benefiting from the recent Amazon Prime Day, which generated an estimated $24.1 billion in sales, a 30% increase year-on-year, highlighting the growth potential in cross-border e-commerce [13][14] Food and Beverage Industry - The food and beverage sector saw a 0.92% increase, underperforming the Shanghai Composite Index by 0.17 percentage points [14] - The liquor market is stabilizing, with major brands focusing on brand positioning and market health, while the overall demand remains under pressure [15][16] - Recommendations include leading brands like Kweichow Moutai and Wuliangye, which have shown resilience and potential for recovery [15][16] Construction and Building Materials - The construction materials sector is expected to improve due to a shift towards healthy competition and urban renewal initiatives, with a focus on technological innovation [17][18] - Cement prices have stabilized, with a slight decrease of 0.4% week-on-week, while demand remains steady despite seasonal fluctuations [17][18] - Recommendations include companies like Three Trees and China National Building Material, which are well-positioned to benefit from domestic demand [18] Computer Industry - The AI ASIC market is rapidly expanding, with a projected market size growth from $14.8 billion in 2024 to $83.8 billion by 2030, reflecting a compound annual growth rate of 33.5% [19][20] - The price advantage of AI ASIC chips over GPUs is significant, with average prices of $5,236 compared to $8,001 for GPUs, making them more attractive for specific applications [19][20] - Companies like Google and Amazon are accelerating their development of ASIC chips, indicating strong future demand in this sector [21] Home Appliances - The home appliance sector is experiencing stable growth in domestic sales, driven by government subsidies, while exports face challenges due to high bases and tariff impacts [22][23] - White goods are seeing a slight increase in domestic sales, with air conditioning units showing a 9.5% growth in domestic shipments [22][23] - Recommendations include leading brands such as Midea and Gree, which are expected to maintain strong performance [22][23] Pharmaceutical Industry - Merck's acquisition of Verona for $10 billion aims to enhance its portfolio with a new COPD treatment, indicating strong growth potential in respiratory therapies [27][28] - WuXi AppTec is projected to achieve a 102% increase in net profit for the first half of 2025, reflecting robust operational performance [29] - The pharmaceutical sector is showing resilience, with a focus on innovative treatments and strategic acquisitions [27][28] Coal Industry - The coal market is expected to stabilize as domestic production increases and imports decrease, with a projected production of 4.85 billion tons in 2025, a 2% increase year-on-year [31][32] - Demand for coal is anticipated to improve in the second half of the year, particularly for non-electric uses such as chemical production [33] - Recommendations include leading coal companies like China Shenhua and China Coal Energy, which are well-positioned to benefit from market dynamics [34] Electronics Industry - The electronics sector is experiencing positive momentum, with a 0.93% increase in stock performance, driven by strong demand in the optical and semiconductor segments [34] - The industry is expected to see significant catalysts in the coming months, particularly in the context of AI and cloud computing advancements [34] - Companies involved in ASIC development are likely to benefit from the ongoing trends in computing and data processing [34]