Zhi Tong Cai Jing·2025-09-16 09:51Group 1 - The core viewpoint of the report indicates that steel mill profitability continues to be under pressure, which is expected to lead to a further decline in coking coal prices in the short term. However, due to a strong increase in July, the baseline coking coal price forecast for 2025 to 2027 has been raised by 7% to 13% [1] - The current valuation level of the domestic coal sector lacks attractiveness, leading the company to maintain a "neutral" rating for the industry [1] - The rating for China Coal Energy (601898) has been downgraded to "sell" due to the expectation of negative free cash flow for the year and the management's apparent unwillingness to increase the dividend payout ratio. The forecasted dividend yield for 2025 to 2027 is only 3.7% to 3.9%, with the target price reduced from HKD 7.39 to HKD 7.21. Additionally, the company's earnings forecast for 2025 to 2027 has been cut by 10% to 16% in response to the latest coal price expectations [1] Group 2 - Despite the current market expectations of relatively low coal inventory levels at domestic ports, which could support winter spot thermal coal prices, the overall forecast for spot coal prices for the year has been lowered by 4% due to disappointing price levels in the second quarter [1] - China Shenhua (601088) demonstrated resilient profitability in its interim results, with the smallest decline in unit profits for its coal business during the coal price drop in the first half of the year. The company maintains a "hold" rating, with the target price increased from HKD 32.18 to HKD 39.48 [1]