智通财经网·2025-10-20 23:45Core Viewpoint - The coal sector in Hong Kong continues its strong performance, driven by a combination of supply constraints and increased demand due to unusual weather patterns and expectations of a cold winter [1][5]. Supply and Demand Dynamics - Domestic coal consumption has reached the highest level in the past five years, influenced by abnormal high temperatures and cold winter expectations, leading to increased winter storage demand [1][5]. - Coal production has been constrained since July due to regulatory checks on overproduction, with July and August showing a year-on-year decline in output [1][3]. - The overall inventory of coal has decreased significantly, with major ports holding 60.43 million tons, down from mid-May highs, and coal mine inventories also showing a reduction [2][3]. Price Movements - The price of thermal coal has rebounded during the off-season, with the price at Huanghua Port reaching 750 RMB/ton, an increase of 34 RMB/ton (4.7%) from the previous week [1]. - Coking coal prices have also seen an increase, with prices at Jing Tang Port rising to 1690 RMB/ton, up 30 RMB/ton (1.8%) [1]. Financial Performance and Outlook - The coal industry is expected to see improved profitability in Q3, with demand showing significant recovery and supply constraints likely to persist [1][2]. - The coal sector's price-to-earnings (PE) and price-to-book (PB) ratios indicate a potential bottom reversal, with expectations of improved profits as coal prices rebound in the latter half of 2025 [4][5]. Company-Specific Insights - China Shenhua (01088) reported a decline in net profit for the first half of 2025 but maintains a high dividend payout ratio, indicating stable cash flow and profitability [7]. - Yanzhou Coal Mining (01171) is recognized for its strong dividend policy and competitive valuation, with a commitment to maintaining a dividend payout ratio of no less than 60% [8]. - China Coal Energy (01898) has shown a decline in net profit but is expected to benefit from stable long-term contracts and new project developments, maintaining a positive outlook [8].