Group 1 - Coal stocks are experiencing significant declines, with Yanzhou Coal Mining Company (01171) down 3.57% to HKD 11.06, Yancoal Australia (03668) down 3.42% to HKD 27.64, China Shenhua Energy (01088) down 2.73% to HKD 40.6, and China Coal Energy (01898) down 2.47% to HKD 11.46 [1] - Despite a year-on-year decline in coal prices expected through the first three quarters of 2025, there has been a noticeable quarter-on-quarter recovery in coal prices in the third quarter due to the impact of "anti-involution" [1] - According to Guotai Junan Securities, coal prices have risen above CNY 830 per ton, and it is believed that the short-term unexpected rise in coal prices may be coming to an end [1] Group 2 - In October, the output of industrial raw coal from large-scale enterprises was 410 million tons, representing a year-on-year decrease of 2.3%, but remaining stable compared to the previous month [1] - The fundamental reason for the recent rise in coal prices since May is a significant reversal in the supply-demand dynamics of the coal industry, indicating that the medium-term upward trend in coal prices is unlikely to change [1]

Group 1 - Coal stocks have seen significant declines, with Yanzhou Coal Mining Company (600188) down 3.57% to HKD 11.06, Yancoal Australia (03668) down 3.42% to HKD 27.64, China Shenhua Energy (601088) down 2.73% to HKD 40.6, and China Coal Energy (601898) down 2.47% to HKD 11.46 [1] - The coal prices are expected to continue to decline year-on-year until the third quarter of 2025, with coal companies' performance also expected to drop year-on-year. However, due to the "anti-involution" effect, coal prices have shown a significant recovery on a quarter-on-quarter basis in the third quarter, leading to improved quarterly performance for coal companies [1] - According to Guotai Junan Securities, if coal prices rise above CNY 830 per ton, the short-term unexpected increase in coal prices may come to an end [1] Group 2 - In October, the output of industrial raw coal from large-scale enterprises was 410 million tons, a year-on-year decrease of 2.3%, but remained stable on a month-on-month basis [1] - The fundamental reason for the recent increase in coal prices since May is a significant reversal in the supply-demand dynamics of the coal industry. This core change indicates that the medium-term upward trend in coal prices will not be altered [1]

Core Points - As of October 2025, the company has a total of 82,284 shareholders, with 75,186 in A-shares and 7,098 in H-shares [1] - As of November 10, the number of A-share shareholders is 74,939, while the number of H-share shareholders will be updated at the end of the month [1]

Investment Strategy Overview - The report highlights the resurgence of resource nationalism driven by de-globalization, emphasizing coal's strategic importance for national energy security. Major coal-producing countries like Indonesia, Mongolia, and the USA are tightening control over coal resources, integrating them into national strategies to bolster energy independence and support domestic industrial and power needs [3][4][5]. Supply Side Analysis - The coal industry is undergoing a significant restructuring, with safety and environmental regulations leading to a more rational supply order. The release of production capacity is expected to be steady but cautious, promoting high-quality development in the coal sector [3][4]. - Domestic supply costs are rising, and coal imports are tightening marginally due to increased scrutiny and regulations [4][32]. Demand Side Analysis - The report anticipates a stable and slight increase in overall coal demand, driven by the rigid growth in electricity consumption and the irreplaceable role of coal in peak regulation and energy security. The expected price range for thermal coal in 2026 is projected to be between 750-800 RMB per ton [3][4][29]. - The resilience of coal power generation is highlighted, particularly in the context of fluctuating renewable energy output, indicating that coal will continue to play a crucial role in the energy mix [3][4]. Investment Recommendations - The report recommends investing in stable, high-dividend companies such as China Shenhua, Shaanxi Coal and Chemical Industry, and China Coal Energy. It also suggests paying attention to companies with price elasticity like Jinkong Coal Industry, Huayang Co., Tebian Electric Apparatus, and Shanxi Coal International [3][4]. - Growth-oriented companies in coal-electricity joint ventures, such as Xinji Energy, are also recommended for consideration [3][4]. Regional Insights - Indonesia's coal production is expected to decline in 2025 due to new resource tax regulations, which will increase export costs and support domestic coal prices [11][12]. - Mongolia's coal production and sales are affected by ongoing political instability, impacting the stability of coal imports [17][18]. - The USA is implementing favorable policies to revitalize its coal industry, including reducing royalty rates and increasing federal land available for coal exploration [21][22]. Future Capacity and Production Trends - Future coal production capacity is expected to be limited, with only about 67 million tons of new capacity projected over the next three years. The focus is shifting towards regions like Xinjiang, which has significant coal reserves and favorable mining conditions [61][67]. - The report notes that the overall coal production in China is unlikely to see significant growth in 2026 due to ongoing safety inspections and regulatory measures [51][53].

Core Viewpoint - The coal sector is expected to stabilize and rebound in prices due to the "check overproduction" policy, benefiting thermal coal companies through improved long-term contract performance and coal-electricity integration, while coking coal companies face pressure due to lagging contract pricing [1][7]. Group 1: Financial Performance - In Q3 2025, the coal sector saw a positive revenue growth, with thermal coal companies experiencing a better net profit growth compared to coking coal companies [1]. - The price of Qinhuangdao 5500 kcal thermal coal increased from 621 CNY/ton on June 30, 2025, to 699 CNY/ton on September 30, 2025, marking a cumulative increase of 12.6% in Q3 [1]. - The overall performance of the coal industry is expected to continue improving due to increased heating demand and tight supply-side policies in Q4 [1][6]. Group 2: Production and Sales - The "check overproduction" policy in Q3 2025 led to stable production among leading thermal coal companies, while coking coal production saw a noticeable decline [2]. - Most listed coal companies did not significantly reduce their output in Q3, with some midstream companies experiencing high sales growth and accelerated inventory reduction due to improved supply-demand dynamics [2]. Group 3: Pricing Dynamics - In Q3 2025, the self-produced coal prices decreased year-on-year by 10% to 20%, while the sales prices of coal companies showed narrow fluctuations or slight increases, with most increases being less than 10% [3]. - The lag in price transmission from market coal prices to listed companies' sales prices is attributed to long-term contract pricing mechanisms and order delivery cycles [3]. Group 4: Cost Management - In H1 2025, coal companies shifted their strategies from volume-based to cost control, which became crucial in facing low coal prices and high inventory levels [4]. - Leading thermal coal companies maintained cost control in Q3 2025, achieving a decrease in unit costs, while some coking coal companies experienced an increase in unit sales costs, negatively impacting their performance [4]. Group 5: Future Outlook - The combination of stable production, rising prices, and cost reductions for thermal coal companies is expected to lead to improved profitability, while coking coal companies may see significant price rebounds in Q4 as long-term contracts adjust to higher market prices [5]. - The coal market is currently in a phase of tightening supply and increasing demand, with winter coal prices expected to remain strong due to seasonal heating needs and ongoing supply-side policies [7]. Group 6: Investment Recommendations - The report suggests actively monitoring robust thermal coal companies such as China Shenhua, China Coal Energy, and Shaanxi Coal and Chemical Industry, as well as high-elasticity coal companies like Yanzhou Coal Mining, Jincheng Anthracite Mining, and Shanxi Coal International [8].

Core Viewpoint - The report indicates that the price of thermal coal has recently increased, with Qinhuangdao Q5500 thermal coal closing at 834 RMB/ton as of November 14, marking a slight increase. The price at Guangzhou Port has reached 880 RMB, surpassing the previously indicated target of 750 RMB for coal-electricity profit sharing, and is currently within the expected fourth target price range of 800-860 RMB [1][2]. Thermal Coal Market Analysis - The recent increase in thermal coal prices is attributed to a combination of supply contraction and a surge in demand, particularly due to heating needs from a cold wave in northern regions and accelerated port restocking [2]. - The price of coking coal at Jing Tang Port is reported at 1860 RMB/ton, rebounding from a low of 1230 RMB in July, while coking coal futures have risen from 719 RMB in June to 1192 RMB, reflecting a cumulative increase of 65.79% [2]. Investment Logic - The price of thermal coal is expected to follow a four-step process: restoring central and local long-term contracts, achieving coal-electricity profit sharing, and surpassing the breakeven point for power plants, which is projected at 860 RMB [3]. - The price of coking coal is influenced more by market dynamics, with a significant correlation to thermal coal prices. The current ratio of coking coal to thermal coal prices is 2.4, suggesting target prices for coking coal of 1608 RMB, 1680 RMB, 1800 RMB, and 2064 RMB corresponding to the four target levels of thermal coal [3]. Investment Recommendations - The coal sector is positioned for potential gains due to both cyclical recovery and dividend stability. The current prices of thermal and coking coal are still at historical lows, providing room for upward movement [4][5]. - The report highlights four main investment lines: 1. Cyclical logic with stocks like Jinko Coal and Yanzhou Coal for thermal coal, and Pingmei Shenma and Huabei Mining for metallurgical coal 2. Dividend logic with companies like China Shenhua and Zhongmei Energy 3. Diversified aluminum elasticity with companies like Shenhuo Co. and Electric Power Investment 4. Growth logic with companies like Xinjie Energy and Guanghui Energy [5].

Market Overview - The market is expected to enter a wide-ranging fluctuation phase in the short term, according to institutions [1][12]. Financial Market Performance - On the last trading day, U.S. stock indices showed mixed results, with the Dow Jones down 0.65%, the Nasdaq up 0.13%, and the S&P 500 slightly down by 0.05% [4]. - Notable tech stocks showed varied performance, with Nvidia and Oracle rebounding by 1.7% and 2.4% respectively, while Meta, Apple, and Google experienced slight declines [4]. - Micron Technology's stock rose by 4.2% as Morgan Stanley raised its target price from $220 to $325 due to expected benefits from DRAM supply shortages [4]. Commodity Prices - International oil prices rebounded, with WTI crude oil increasing by 2.39% to $60.09 per barrel and Brent crude oil rising by 2.19% to $64.39 per barrel [5]. - International gold prices fell, with COMEX gold futures for November delivery dropping by 2.37% to $4087.60 per ounce [6]. Policy and Regulatory Developments - The State Council of China held a meeting to enhance the adaptability of supply and demand in consumer goods, aiming to release consumption potential and promote economic circulation [7]. - The China Securities Regulatory Commission emphasized the importance of the "14th Five-Year Plan" period for building a resilient and robust capital market [8]. - The Ministry of Commerce and other departments issued a notice to strengthen management of second-hand car exports, imposing stricter controls on new cars exported as second-hand vehicles [10]. - The State Administration for Market Regulation released a draft guideline for antitrust compliance in internet platforms, addressing new monopoly risks [11]. Corporate Developments - Huawei is set to release breakthrough technology in the AI field, potentially addressing efficiency issues in computing resource utilization [12]. - Apple CEO Tim Cook is rumored to possibly resign next year [12]. - Various companies, including Rongbai Technology and Fudan Microelectronics, are undergoing significant corporate changes, such as partnerships and share transfers [12].

Investment Rating - The industry rating is "Positive" [1] Core Viewpoints - The report indicates that the coal consumption is approaching a turning point, with a clear direction and potential for growth. The recent cold wave is expected to increase coal demand as power plants will need to procure more coal, leading to a potential rise in coal prices [6][29] - The report highlights that the average daily coal sales from monitored enterprises increased by 2.7% week-on-week but decreased by 2.4% year-on-year, indicating a mixed demand scenario [2] - The report suggests that the supply-demand balance is expected to gradually improve in the fourth quarter, with coal prices likely to rise steadily [6][29] Summary by Sections Coal Market Performance - The coal sector underperformed slightly, with a decline of 0.78% compared to a 1.08% drop in the CSI 300 index, outperforming it by 0.3 percentage points [2] - The average daily coal production from monitored enterprises was 752 million tons, a 2% increase week-on-week but a 2.2% decrease year-on-year [2] Price Trends - The price of thermal coal (Q5500K) in the Bohai Rim region was 698 RMB/ton, up 0.58% week-on-week, while the import price index for thermal coal was 944 RMB/ton, up 6.19% week-on-week [3] - Coking coal prices also saw increases, with the main coking coal price at 1830 RMB/ton, up 1.7% week-on-week [4] Inventory Levels - Total coal inventory (including port storage) was 24.3 million tons, a 2.1% increase week-on-week but a 19.5% decrease year-on-year [2][8] - The report notes that the overall coal inventory in society was 17.68 million tons, with a week-on-week increase of 374,000 tons but a year-on-year decrease of 873,000 tons [3][28] Investment Recommendations - The report recommends focusing on flexible thermal coal companies and those in turnaround situations in coking coal and coke sectors. Key companies to watch include China Shenhua, Shaanxi Coal and Chemical Industry, and Yanzhou Coal Mining [6][29]

Core Points - The third round of the fifth batch of central ecological and environmental protection inspections has been fully launched, approved by the Central Committee of the Communist Party and the State Council [1] - Eight central ecological and environmental protection inspection teams have been formed to conduct routine inspections in Beijing, Tianjin, and Hebei, as well as five central enterprises [1] - Special inspections for the Grand Canal ecological environment protection will be conducted in eight provinces, focusing on cultural protection and ecological environment [1] Group 1 - Eight central inspection teams will conduct inspections for one month in Beijing, Tianjin, and Hebei, and two weeks for special inspections in Jiangsu, Zhejiang, Anhui, Shandong, and Henan [1] - The inspection teams are led by designated leaders for each region and enterprise, ensuring a structured approach to the inspections [1] - The inspections aim to enhance the effectiveness of ecological and environmental protection efforts and address issues in a systematic manner [2] Group 2 - The inspection teams will adhere to the principles of the "two establishments," enhancing awareness and confidence while maintaining a problem-oriented approach [2] - Contact information will be established for receiving reports related to ecological and environmental protection during the inspection period [2]

Investment Rating - The industry investment rating is "Positive" and is maintained [8] Core Views - The report indicates that the upward trend in thermal coal prices is expected to continue due to supply constraints from the November central safety production assessments and improving demand as winter approaches, with prices likely to exceed expectations [5][6] - For coking coal, despite short-term demand pressure from the off-season, the current low inventory and tight supply suggest significant price recovery potential if pro-cyclical policies are reintroduced globally [5][6] - The report emphasizes the importance of recognizing the bottom reversal opportunities in the coal sector, supported by low price-to-book ratios and low holdings [6] Summary by Sections Thermal Coal - As of November 14, the market price for thermal coal at Qinhuangdao Port is 834 RMB/ton, a week-on-week increase of 17 RMB/ton. The report anticipates continued price increases due to tight supply and low port inventories, alongside seasonal demand improvements [5][13] - The report notes that the inventory at the northern three ports is 12.58 million tons, down 12% year-on-year, while power plant inventories are 130 million tons, down 1.5% year-on-year, with usable days at 25.9 days, up 1.2 days year-on-year [6][14] Coking Coal - The price for main coking coal at Jingtang Port remains stable at 1860 RMB/ton as of November 14. The report highlights that while steel mill demand is currently weak, the supply situation for coking coal is tight, indicating potential for price elasticity [5][6] - The report also mentions that the average daily pig iron production at sample steel mills is 2.3688 million tons, a year-on-year increase of 0.4% [15] Valuation and Market Dynamics - The report suggests that the current price-to-book ratios for coking coal and major thermal coal companies are at the lower third percentile since 2016, indicating undervaluation compared to other cyclical resource sectors [6] - The report recommends a mixed strategy for investment, highlighting companies like Yanzhou Coal Mining Company and China Shenhua Energy as stable leaders, while also suggesting more aggressive plays in companies like Lu'an Environmental Energy and Jinneng Holding Group [6][27]