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]

Investment Rating - The report suggests that domestic thermal power companies have low PE valuations and potential for higher dividends, with overseas leaders like Duke Energy having PEs around 20 [2][10]. Core Insights - The report highlights that thermal power asset acquisition/sale transactions have PB valuations significantly higher than the secondary market valuations for thermal power stocks, indicating that thermal power stocks are undervalued [1][11]. - It notes that since 2022, there have been multiple asset transactions, primarily in northern and central regions, with 7 acquisitions (4 by power companies and 3 by coal companies) and 4 sales (all by power companies) [2][10]. - The median PB valuation for thermal power assets in these transactions is 1.3, while the median PB for listed thermal power companies is 0.9, suggesting a disparity in valuation [11][12]. - The median PE valuation for thermal power assets exceeds 10, with a range of 7.2 to 31.8 for the relevant transactions, indicating that industry capital values thermal assets at a premium [12]. Summary by Sections Investment Advice - Domestic thermal power companies are viewed as having low PE valuations with room for dividend increases, while international leaders are valued around 20 times PE [2][10]. Asset Transactions - The report details 11 acquisition/sale cases, with 3 having negative book values but acquired at a premium, and the remaining 8 having PBs ranging from 1.0 to 2.6 [11][12]. - The report emphasizes that the thermal power sector is experiencing significant asset transactions, particularly in the northern and central regions of China [2][10]. Valuation Metrics - The report indicates that the median PB for thermal power assets is 1.3, compared to 0.9 for listed companies, highlighting the undervaluation of thermal power stocks [11][12]. - The median PE for thermal power assets is noted to be over 10, with a range of 7.2 to 31.8, suggesting that industry capital values thermal assets at a higher level than the secondary market [12].

Market Overview - The Shanghai Composite Index fell by 0.42% on July 15, with six industries rising, led by telecommunications and computers, which increased by 4.61% and 1.42% respectively [2] - The coal industry experienced the largest decline, dropping by 1.92% [2] Capital Flow - The main capital outflow from the two markets totaled 41.186 billion yuan, with only three industries seeing net inflows: telecommunications (2.151 billion yuan), computers (1.839 billion yuan), and a minor inflow in the comprehensive sector (178.56 thousand yuan) [2] - The power equipment industry had the highest net outflow, totaling 5.055 billion yuan, followed by the non-ferrous metals industry with a net outflow of 4.508 billion yuan [2] Coal Industry Analysis - The coal industry saw a net outflow of 8.81 million yuan, with 37 stocks in the sector; only three stocks rose while 33 fell [3] - The top net inflow stock in the coal sector was Xinji Energy, with an inflow of 28.766 million yuan, followed by Yunwei Co. and Xindaozhou A, with inflows of 6.0482 million yuan and 3.6807 million yuan respectively [3][5] - Major stocks with significant net outflows included Yongtai Energy (net outflow of 118.2494 million yuan), Shaanxi Coal and Energy (78.1593 million yuan), and Shanxi Coking Coal (69.0028 million yuan) [4] Individual Stock Performance - The following stocks in the coal industry had notable declines: - Yongtai Energy: -4.14% with a turnover rate of 3.77% and a net outflow of 118.2494 million yuan [4] - Shaanxi Coal and Energy: -1.64% with a turnover rate of 0.48% and a net outflow of 78.1593 million yuan [4] - Shanxi Coking Coal: -3.01% with a turnover rate of 1.73% and a net outflow of 69.0028 million yuan [4]

Supply: Marginal Increment Significantly Reduced - Domestic coal production from January to May increased by approximately 130 million tons year-on-year, while imports decreased by about 16 million tons, indicating an overall increase in supply [3][7] - The domestic raw coal production reached 1.99 billion tons from January to May, reflecting a year-on-year increase of 6%. However, the growth rate is expected to narrow in the second half of the year, with an estimated total production of around 4.85 billion tons for 2025, representing a year-on-year increase of 9 million tons (2%) [3][9] - The decrease in imports is attributed to weak demand, high inventory levels, and diminishing price advantages of imported coal. For the first five months of 2025, coal imports totaled 19 million tons, a year-on-year decrease of approximately 16 million tons (8%) [3][64] Demand: Short-term Improvement Expected, Medium-term Resilience Visible - National commodity coal consumption from January to May reached 2.05 billion tons, showing a slight year-on-year increase of 0.1 billion tons (0.5%). The demand is expected to improve in the second half of the year as the consumption peak season approaches [3][4] - In the thermal power sector, the demand is under pressure due to slowing electricity growth and competition from renewable energy. However, the demand for thermal power is expected to rebound in the second half of the year [3][4] - Non-electric demand, particularly from the chemical sector, remains strong, with significant year-on-year growth in coal-to-PVC, coal-to-ethylene glycol, and coal-to-methanol production [3][4] Inventory: High Port Inventory Declining, De-stocking Remains Focus - Port inventories are currently at high levels but are expected to decline as demand improves in the peak consumption season. The focus will remain on de-stocking [4] Price: Thermal Coal Prices at Bottom, Coking Coal Prices Showing Stages of Rebound - The average market price of Qinhuangdao Q5500 thermal coal fell by approximately 199 yuan/ton in the first half of 2025, a year-on-year decrease of 23%. However, there is potential for price rebound as supply-demand dynamics improve [3][57] Investment Recommendations: High Dividend Value Still Exists, Stage Game Elasticity - The report suggests that despite the downward pressure on coal prices, there is still potential for a rebound in the second half of the year. The resilience of coal demand is viewed positively in the medium term [3][4] - Key investment targets include stable-performing coal companies such as China Shenhua, China Coal Energy, and Shaanxi Coal and Chemical Industry, as well as elastic stocks like Electric Power Investment and Jinko Coal Industry [3][4]

Investment Strategy - Crude oil supply is expected to remain limited due to declining global oil and gas capital expenditures, with a significant reduction of nearly 122% from 2014 levels to $351 billion in 2021 [9][30][31] - Geopolitical tensions, particularly the Russia-Ukraine conflict, have exacerbated concerns over energy supply, with the EU planning to reduce oil imports from Russia by 90% by the end of 2022 [10][31] - Brent crude oil prices increased to $71.97 per barrel, up 2.95% week-on-week, while WTI prices rose to $67.93 per barrel, up 2.46% [11][32] Coal Industry - The average market price for Qinhuangdao port thermal coal (Q5500) rose to 628 RMB/ton, a 1.06% increase from the previous week, driven by improved demand and trading conditions [12][13] - Coal production is gradually recovering, with total inventory at ports reported at 26.9 million tons, down 2.46% week-on-week, indicating a tightening supply [12][13] - The domestic coal consumption for key power plants increased to 4.88 million tons per day, a 6.09% rise from the previous week, reflecting higher electricity demand due to ongoing high temperatures [12][13] Coking Coal - Coking coal prices have seen a slight increase, with the price for Shanxi main coking coal at 1,350 RMB/ton, up 9.76% week-on-week, as supply conditions improve [14][15] - The overall supply-demand situation for coking coal is improving, with increased orders from steel mills and a decrease in inventory levels [14][15] Natural Gas - The EIA projects that U.S. natural gas production and consumption will reach record highs in 2025, with expected consumption of 91.4 billion cubic feet per day [16][17] - U.S. natural gas prices decreased to $3.33 per million British thermal units, down 2.9% from the previous week, while European gas prices increased [16][17] - The EU has reached an agreement on a natural gas price cap, which may lead to liquidity issues and potential supply shortages [17] Oilfield Services - The oilfield services sector is experiencing a recovery in demand due to increased capital expenditures from major oil companies, which are projected to reach 581.738 billion RMB in 2023, reflecting a compound annual growth rate of 6% since 2018 [18][19] - The number of active drilling rigs globally decreased to 1,576, with a notable decline in the Middle East and the U.S. [19]

Group 1: Coal Sector Insights - The coal sector experienced a significant boost on July 14, with stocks like Zhengzhou Coal Power hitting the daily limit up, and other companies such as Shanxi Coal International and Liaoning Energy also seeing substantial gains [4][7]. - The China Coal Transportation and Marketing Association held a meeting emphasizing the need for coal companies to recognize the severe imbalance in supply and demand, and to strictly implement long-term contracts for electricity coal [7]. - The meeting also highlighted the importance of maintaining safety and stability in production, improving coal supply quality, and addressing "involution" competition within the industry [7]. Group 2: Market Performance - On July 14, the A-share market showed mixed results, with the Shanghai Composite Index rising by 0.27%, while the Shenzhen Component and ChiNext Index fell by 0.11% and 0.45% respectively [15]. - A total of 3,179 stocks rose, with 72 hitting the daily limit up, while 2,064 stocks declined, including 18 that hit the daily limit down [16][17]. - The total trading volume reached 14,809.22 billion CNY, with a total of 122,924.9 million shares traded [17]. Group 3: Other Sector Developments - The "anti-involution" policy is expected to stimulate market liquidity and has drawn comparisons to the "Belt and Road Initiative" in terms of its long-term narrative potential [8]. - Various sectors, including construction, steel, and cement, have expressed intentions to address structural contradictions within their industries, with specific policies anticipated to be introduced soon [9]. - In Dongguan, a new plan was released to promote high-quality service consumption, including initiatives to enhance dining experiences and expand elderly care services [11][13].

Summary of Shaanxi Coal Industry Conference Call Industry Overview - The coal price is significantly influenced by demand, with a slight improvement expected in the second half of the year, but it is unlikely to exceed the levels of the first quarter [2][5] - A reduction in imported coal is anticipated, with an estimated decrease of several million tons for the year, making macroeconomic demand changes a key factor [2][5] Company Performance and Strategy - Shaanxi Coal aims to maintain stable production, with an expected output of around 170 million tons, as production is nearing its ceiling [2][6] - The company is currently facing slow progress in the approval process for new mines, which is critical for future production growth [2][6] - The company has not received any notifications regarding anti-involution policies, indicating that self-regulation in the industry is challenging and may require administrative measures for effective management [2][7][8] - Shaanxi Coal has implemented a long-term contract strategy, ensuring that 60% of contracts are executed at a capped price of 520 RMB/ton, with excess amounts settled at market prices to secure sales and profit margins [2][9][10] Financial Performance - The average selling price of coal decreased in the second quarter, with April's average at approximately 390 RMB/ton, stabilizing around 380 RMB/ton in May and June [4] - The company does not plan to disclose a mid-year performance report as it does not meet mandatory requirements [12] - A mid-term dividend is likely due to the company's strong performance last year, with positive feedback from regulatory authorities [13] Cost and Taxation - The decline in average prices in the second quarter led to a reduction in resource taxes, while other costs remained stable, with an average cost of about 280 RMB/ton, returning to pre-pandemic levels [14] - The entry of the central environmental supervision team has not impacted production operations, focusing instead on oversight and reminders [15] Operational Insights - The current production capacity can be sustained for approximately 70 years, although new capacity will be needed to compensate for any depletion of existing mines [19] - The company has no sales pressure due to the scarcity and quality of its coal types, and it aims to increase sales prices through favorable policies [11] - The impact of recent freight adjustments is minimal as the final freight costs are borne by customers [22] Additional Notes - The company’s asset management business has been cleared, allowing a focus on core operations [3] - The second quarter saw the hot pot restaurant segment contribute less than 300 million RMB, slightly lower than the first quarter [21] - The one-ticket revenue system does not affect profit calculations, as freight is included in both revenue and costs, but is excluded in complete cost calculations [16][17]

Investment Rating - The investment rating for the coal industry is "Positive" (maintained) [1] Core Viewpoints - The report indicates that the prices of thermal coal and coking coal are on the rebound, suggesting a turning point in the market [4][12] - The fundamentals for thermal coal remain favorable, with a current price of 632 CNY/ton for Qinhuangdao Q5500 thermal coal, reflecting a 3.8% increase from the lowest price of 609 CNY/ton earlier this year [3][4] - Coking coal prices have also seen significant increases, with the price at Jing Tang Port reaching 1350 CNY/ton, a 9.76% rise from the previous low of 1230 CNY/ton [4][20] Summary by Sections Investment Logic - Thermal coal is categorized as a policy coal type, with expectations for prices to rebound towards long-term contract prices around 670 CNY/ton, potentially exceeding 700 CNY/ton if favorable fundamentals persist [4][12] - Coking coal is more influenced by market dynamics, with current prices indicating a state of overselling, and supply-side tightening expected due to policy changes [4][12] Key Indicators Overview - The report highlights a slight decrease of 1.08% in the coal sector, underperforming the CSI 300 index by 1.9 percentage points [7] - The current price-to-earnings (PE) ratio for the coal sector is 11.48, and the price-to-book (PB) ratio is 1.18, indicating relatively low valuations compared to other sectors [9] Thermal Coal Market Insights - As of July 11, the inventory at ports has decreased by 19% from the highest level of 3316.3 million tons earlier this year, currently standing at 26.89 million tons [3][4] - Daily coal consumption in coastal provinces has increased to 2.148 million tons, driven by seasonal demand [4][19] Coking Coal Market Insights - The report notes a significant rebound in coking coal prices, with futures rising from 719 CNY to 913 CNY, a cumulative increase of 27% [4][20] - The average daily pig iron production remains high at 2.408 million tons, although there are signs of potential declines due to seasonal factors [4][20] Investment Recommendations - The report suggests a dual logic of cycles and dividends for investment in the coal sector, identifying four main lines for stock selection: dividend logic, cyclical logic, diversified aluminum elasticity, and growth logic [5][13] - Specific companies recommended for investment include China Shenhua, China Coal Energy, and Shaanxi Coal and Chemical Industry [5][13]

Investment Rating - The industry rating is "Positive" [1] Core Views - Social inventory has decreased for the first time, and summer demand is expected to remain strong. Domestic power plants are increasing daily coal consumption, leading to rising coal prices. Policies to control production and improve quality are being emphasized, supporting the fundamentals of both coking coal and thermal coal [6][29] - The report highlights that the overall level of social inventory is stable, with a significant increase in daily consumption expected due to hot weather and ongoing replenishment needs at power plants. The coking coal sector may see marginal improvements in performance due to potential declines in capacity utilization driven by environmental factors [6][29] Summary by Sections Coal Sector Performance - The coal sector saw a weekly increase of 0.71%, underperforming the CSI 300 index, which rose by 0.82%. A total of 34 stocks in the sector increased in price, while 3 declined. Meijin Energy had the highest weekly increase at 10.8% [2] - Key monitored enterprises reported an average daily coal sales volume of 7.21 million tons from July 4 to July 10, 2025, a week-on-week increase of 3.7% and a year-on-year increase of 2.8% [2] Price Trends - As of July 11, 2025, the price of thermal coal (Q5500K) in the Bohai Rim was 662 CNY/ton, a week-on-week decrease of 0.3%. The price index for imported thermal coal rose by 1.21% to 750 CNY/ton [3] - The price of coking coal at Jingtang Port was 1310 CNY/ton, up 4.8% week-on-week, while the price of metallurgical coke remained stable at 1320 CNY/ton [4] Supply and Demand Dynamics - The cumulative coal sales volume for key monitored enterprises was 131.73 million tons as of July 10, 2025, a year-on-year decrease of 3.8%. The demand from the power and chemical industries showed a year-on-year decrease of 3% and an increase of 16.6%, respectively [2][28] - The report indicates that the daily coal consumption in the power sector is expected to rise significantly, with the total social inventory of coal at 32.86 million tons, a week-on-week decrease of 2.6% [2][28] Investment Recommendations - The report suggests focusing on high-dividend thermal coal companies and coking coal companies that may experience a turnaround. Key companies to watch include China Shenhua, Shaanxi Coal and Chemical Industry, and Meijin Energy among others [6][29]

Investment Rating - The investment rating for the coal mining industry is "Positive" [2] Core Viewpoints - The current phase is the early stage of a new upward cycle in the coal economy, with a resonance between fundamentals and policies, making it an opportune time to accumulate coal sector investments [11][12] - The underlying investment logic of coal capacity shortages remains unchanged, with short-term supply-demand balance and long-term gaps still present [11][12] - Coal prices have established a bottom and are trending towards a new platform, with high profitability, cash flow, return on equity (ROE) of 10-20%, and dividend yields over 5% for quality coal companies [11][12] - The coal sector is relatively undervalued, with overall valuation expected to improve, supported by high premiums in the primary mining rights market and a price-to-book (PB) ratio around 1 for most companies [11][12] - The coal sector is expected to maintain a tight supply-demand balance over the next 3-5 years, with quality coal companies exhibiting high barriers to entry, cash flow, dividends, and yield characteristics [11][12] Summary by Sections Coal Price Tracking - As of July 12, the market price for Qinhuangdao port thermal coal (Q5500) is 624 CNY/ton, an increase of 8 CNY/ton week-on-week [28] - The price for coking coal at Jing Tang port is 1310 CNY/ton, up 60 CNY/ton week-on-week [30] Coal Supply and Demand Tracking - The capacity utilization rate for sample thermal coal mines is 93.7%, down 0.3 percentage points week-on-week, while the utilization rate for coking coal mines is 85.52%, up 1.7 percentage points [11][46] - Daily coal consumption in coastal provinces increased by 6.10 thousand tons/day (+2.92%) week-on-week, while inland provinces saw a decrease of 9.50 thousand tons/day (-2.61%) [11][47] Coal Inventory Situation - As of July 10, coal inventory in coastal provinces decreased by 785 thousand tons (-2.18%) week-on-week, while inland provinces saw a slight decrease of 0.70 thousand tons (-0.01%) [11][47] Key Companies to Watch - Focus on stable and robust performers such as China Shenhua, Shaanxi Coal and Chemical Industry, and China Coal Energy [12] - Attention to companies with significant upside potential like Yanzhou Coal Mining, China Power Investment, and Guanghui Energy [12]