Summary of Shanxi Coal International Conference Call Company Overview - **Company**: Shanxi Coal International - **Date**: October 2025 Key Points Industry and Sales Performance - October sales were impacted by the off-peak season, leading to a significant decline in thermal coal sales, while metallurgical coal sales remained stable, ensuring no issues for annual sales [2][3] - Overall prices saw a slight increase compared to September, with good cost control expected to keep annual costs below 300 RMB/ton, a decrease of 5%-10% year-on-year [2][3] - Inventory has been decreasing since the peak in July 2025, currently around 1.56 million tons, with manageable year-end inventory pressure expected to remain between 200,000 to 300,000 tons [2][5] Pricing Mechanism - The company employs a pricing mechanism based on a benchmark price plus a floating price, with some products reaching price ceilings and executing long-term contracts [2][6] - For 2026, there may be adjustments to long-term contract pricing to align more closely with market conditions, potentially moving to a benchmark price rather than a range [2][7] Production and Supply - Production in October 2025 was around 2.6 million tons, with a full-year production target of 30-35 million tons, which is expected to be met [3][4] - The company has announced the purchase of over 2 million tons of capacity indicators to supplement procedures for the Changchun Xin and Hanjiawa mining areas, which will not affect existing capacity [2][10] - The complexity of capacity increase procedures in Shanxi province may impact future supply if not completed by year-end [2][11] Market Regulations and Taxation - There are rumors that the National Development and Reform Commission (NDRC) may guide state-owned enterprises to control coal prices below 850 RMB/ton, but the company has not received any formal guidance yet [2][12] - The company faced high tax burdens in Q3 due to increased resource taxes and local tax authority demands for back payments, but pressure is expected to ease in Q4 [2][13][14] Future Price Outlook - The coal supply-demand relationship is expected to improve in 2026, but the intensity of supply-side reforms may weaken [2][15] - Coal prices are projected to fluctuate between 700 to 800 RMB/ton, with potential risks of price drops during the off-peak season [2][16] Specific Coal Types - The price trends for coking coal and premium coking coal have diverged, with premium coking coal prices rising significantly while coking coal prices have remained relatively stable [2][18] Supply Assurance - The company aims for a total sales target of 25-26 million tons in 2025, with a supply assurance target of 16-17 million tons, of which approximately 13-14 million tons have been completed [2][17] General Market Sentiment - The recent supply assurance meetings are primarily aimed at addressing winter heating demands, with no strict requirements set for achieving the 1.3 billion ton target, indicating limited marginal impact on overall production plans [2][19]

Core Viewpoint - Shanmei International's stock price has shown a slight increase of 0.72% year-to-date, but has experienced a decline of 2.43% over the past five trading days and 0.80% over the past twenty days, indicating volatility in its recent performance [1]. Financial Performance - For the period from January to September 2025, Shanmei International reported a revenue of 15.332 billion yuan, representing a year-on-year decrease of 30.20%. The net profit attributable to shareholders was 1.046 billion yuan, down 49.74% compared to the previous year [2]. - The company has cumulatively distributed 11.570 billion yuan in dividends since its A-share listing, with 6.225 billion yuan distributed over the last three years [3]. Shareholder Structure - As of September 30, 2025, the number of shareholders for Shanmei International was 71,900, a decrease of 12.97% from the previous period. The average number of circulating shares per shareholder increased by 14.91% to 27,566 shares [2]. - The top ten circulating shareholders include notable ETFs, with Huatai-PB SSE Dividend ETF holding 45.7224 million shares, an increase of 2.5939 million shares from the previous period, and Guotai CSI Coal ETF holding 39.2427 million shares, an increase of 23.8534 million shares [3].

Investment Rating - The report maintains a positive outlook on the coal industry, suggesting a "Buy" rating for specific stocks based on their performance relative to the market [3][29]. Core Insights - The report highlights that the coal prices are expected to rise due to supply constraints and seasonal demand, particularly in the context of winter heating needs [3][4]. - It emphasizes the impact of environmental regulations and safety inspections on coal production, which are likely to tighten supply further [3][7]. - The report identifies several companies as potential investment opportunities, including Jin控煤业, 华阳股份, and 山煤国际, based on their price elasticity and valuation [3][4]. Summary by Sections 1. Recent Industry Policies and Dynamics - The report discusses the initiation of the third round of central ecological environment protection inspections, which will affect major coal-producing regions and companies [7]. - It mentions the State Energy Administration's guidance on integrating coal with renewable energy, focusing on low-carbon transitions and new energy developments in mining areas [7]. 2. Price Trends of Coal - The report notes fluctuations in domestic coal prices, with specific increases in certain regions, such as a rise of 10 CNY/ton in Dazhou and Ordos [8]. - The overall coal price index in the Bohai Rim region has increased by 4 CNY/ton, indicating a general upward trend in coal prices [8]. 3. International Oil Prices - Brent crude oil prices have risen by 1.19% to 64.39 USD/barrel, which may influence coal prices due to the relationship between oil and coal markets [14]. 4. Port Inventory Trends - The report indicates an increase in coal inventory at the Bohai Rim ports, with a total of 24.3 million tons, reflecting a 2.56% rise week-on-week [18]. 5. Domestic and International Freight Rates - Domestic coastal shipping rates have increased slightly, with an average of 51.52 CNY/ton, while international shipping rates from Australia to China have also seen a rise [23]. 6. Key Company Valuation Table - The report provides a detailed valuation table for key companies in the coal sector, highlighting their stock prices, market capitalization, and earnings projections [28].

Core Viewpoint - As of November 17, 2025, Shanmei International (600546) closed at 11.45 yuan, reflecting a 0.53% increase, with significant net inflows from major funds and notable outflows from retail investors [1][2]. Financial Performance - For the first three quarters of 2025, Shanmei International reported a main revenue of 15.332 billion yuan, a year-on-year decrease of 30.2% - The net profit attributable to shareholders was 1.046 billion yuan, down 49.74% year-on-year - The third quarter alone saw a main revenue of 5.673 billion yuan, a decline of 28.27% year-on-year, and a net profit of 391 million yuan, down 50.53% year-on-year [3]. Market Position - Shanmei International's total market capitalization is 22.699 billion yuan, ranking 14th in the coal industry - The company has a net asset value of 20.457 billion yuan, ranking 13th, and a net profit of 1.046 billion yuan, ranking 12th in the industry - The company's price-to-earnings ratio is 16.27, significantly higher than the industry average of 6.3, indicating a relatively high valuation compared to peers [3]. Recent Fund Flow - On November 17, 2025, major funds had a net inflow of 14.2202 million yuan, accounting for 5.95% of the total transaction volume - Retail investors experienced a net outflow of 1.23919 million yuan, representing 5.19% of the total transaction volume, indicating a shift in investor sentiment [1][2]. Analyst Ratings - Over the past 90 days, 10 institutions have rated Shanmei International, with 5 buy ratings and 5 hold ratings - The average target price set by analysts is 11.69 yuan, suggesting a potential upside from the current trading price [4].

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].

Investment Rating - The report maintains a "Recommended" rating for the coal mining industry [2] Core Viewpoints - The coal price is expected to remain stable and slightly strong, with the northern port coal price reaching 834 RMB/ton, an increase of 17 RMB/ton week-on-week, as the industry anticipates an increase in daily consumption during the winter peak season [4][14][71] - The supply-demand balance in the coal market remains favorable, with stable production and a slight increase in port inventories, while non-electric demand from sectors like metallurgy and chemicals continues to support coal consumption [5][14][71] - The report highlights the investment value of coal companies, particularly those with strong cash flows and high dividend yields, amidst market volatility and external economic pressures [7][73] Summary by Sections 1. Thermal Coal - The northern port thermal coal price increased to 834 RMB/ton, with production capacity utilization in the Sanxi region stable at 89.79% [14][21] - Daily consumption at coastal and inland power plants showed a week-on-week change of -8.0 and +12.3 thousand tons, respectively, indicating a recovery phase [14][24] - The report notes a decrease in coal imports due to rising prices and lower acceptance from downstream users, while supply constraints from Indonesia and Russia are expected to limit import availability [14][71] 2. Coking Coal - Coking coal production capacity utilization increased by 0.37 percentage points to 84.2%, driven by recovery in some mines in Shanxi [5][72] - The average customs clearance volume at Ganqimaodu port rose to 1,366 trucks, indicating stable supply [5][72] - The report anticipates that despite short-term market sentiment fluctuations, coking coal prices will remain stable due to low production and inventory levels [6][72] 3. Coke - The supply-demand balance for coke remains stable, with some steel mills accepting a price increase of 50-55 RMB/ton, effective from November 15 [6][51] - The report indicates that independent coking plants have seen a decrease in production rates, while iron output has increased, supporting demand for coke [6][58] 4. Investment Focus - The report emphasizes the importance of focusing on robust coal companies such as China Shenhua, Shaanxi Coal, and Yanzhou Coal, which exhibit strong fundamentals and growth potential [7][9][73] - It suggests that investors should consider the value attributes of the coal sector, particularly in light of ongoing market dynamics and regulatory changes [7][73]

Investment Rating - The investment rating for the coal industry is "Positive" (maintained) [1] Core Viewpoints - The report indicates that the price of thermal coal has surpassed the target of 800 yuan, with the current price at 834 yuan per ton as of November 14, reflecting a slight increase. The price at Guangzhou Port has reached 880 yuan, achieving the previously set target of 750 yuan for coal-electricity profit sharing. The price increase is attributed to supply contraction and a surge in demand due to the northern cold wave [3][4] - The report outlines that the price of coking coal has rebounded significantly from a low of 1230 yuan in July to 1860 yuan per ton as of November 14, with a notable increase in futures prices as well [3][4] - The investment logic suggests that both thermal and coking coal prices are at a turning point, with thermal coal prices expected to follow a four-step recovery process, ultimately reaching a balance point around 860 yuan [4][13] Summary by Sections Investment Logic - Thermal coal is categorized as a policy-driven commodity, with price recovery expected to follow a structured process involving the restoration of long-term contracts and achieving profit-sharing targets. The ideal target price for coal-electricity profit sharing is projected to be around 750 yuan for 2025, with an anticipated price range of 800-860 yuan [4][13] - Coking coal prices are more influenced by market dynamics, with target prices linked to the ratio of coking coal to thermal coal prices. The current ratio suggests target prices for coking coal at 1608 yuan, 1680 yuan, 1800 yuan, and 2064 yuan corresponding to thermal coal's price targets [4][13] Investment Recommendations - The report identifies four main investment lines in the coal sector: 1. **Cyclical Logic**: Companies like Jinko Coal and Yanzhou Coal Mining are highlighted for their potential in thermal coal. 2. **Dividend Logic**: Companies such as China Shenhua and China Coal Energy are noted for their strong dividend potential. 3. **Diversified Aluminum Elasticity**: Companies like Shenhua Holdings and Electric Power Investment are mentioned. 4. **Growth Logic**: New Energy and Guanghui Energy are recognized for their growth potential [5][14] Key Market Indicators - The coal index experienced a slight decline of 0.96%, outperforming the CSI 300 index by 0.12 percentage points. The average PE ratio for the coal sector is reported at 15.9, while the PB ratio stands at 1.42, indicating a relatively low valuation compared to other sectors [8][26][30]

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]

Investment Rating - The industry investment rating is "Positive" (maintained) [4] Core Viewpoints - The coal sector showed positive revenue growth in Q3 2025, with the net profit growth rate of thermal coal companies outperforming that of coking coal companies [4] - The price of Qinhuangdao 5500 kcal thermal coal increased from 621 RMB/ton on June 30, 2025, to 699 RMB/ton on September 30, 2025, reflecting a cumulative increase of 12.6% in Q3 [4] - The overall performance of coal companies in Q3 was supported by rising coal prices, inventory reduction, and increased electricity sales during peak summer demand [4] - The production of leading thermal coal companies remained stable, while coking coal production faced pressure, leading to more aggressive inventory reduction [4] - The improvement in long-term contracts for thermal coal helped boost coal prices, although some companies still recorded a decline in unit sales revenue due to delayed price transmission [4] - The cost control strategies adopted by thermal coal companies helped maintain profitability despite rising costs in some coking coal companies [4] - The winter season is expected to see strong coal prices due to supply constraints and increased demand for heating [5] Summary by Sections Section: Q3 Performance - The coal sector's Q3 revenue showed a positive trend, with thermal coal companies experiencing a net profit growth rate that was better than that of coking coal companies [4] - The overall revenue for coal companies in Q3 was positively impacted by rising coal prices and increased electricity sales [4] Section: Price Trends - The price of thermal coal saw a significant increase in Q3, with a 12.6% rise in Qinhuangdao 5500 kcal thermal coal prices [4] - Despite the increase in market prices, some companies experienced a lag in price transmission, affecting their unit sales revenue [4] Section: Production and Inventory - Leading thermal coal companies maintained stable production levels, while coking coal production faced challenges [4] - Most listed coal companies did not significantly reduce their sales volumes, with some companies achieving higher sales in Q3 [4] Section: Cost Management - Thermal coal companies continued to focus on cost control, resulting in a decrease in unit costs [4] - Some coking coal companies faced rising costs, which negatively impacted their performance [4] Section: Future Outlook - The report suggests a positive outlook for Q4 2025, with expectations of continued improvement in coal company performance due to favorable market conditions [5] - The winter season is anticipated to bring strong coal prices driven by supply constraints and increased heating demand [5]