CSEC,China Shenhua(601088) HTSC·2025-06-06 10:51Investment Rating - The investment rating for the company is "Buy" (maintained) for both A-shares and H-shares, with target prices set at RMB 45.50 and HKD 40.00 respectively [9][10]. Core Views - The report emphasizes the company's strong resource base, business synergy, and stable downstream consumption, which enhance its ability to withstand cyclical fluctuations. The low volatility and high yield logic continue to highlight the company's value, thereby restoring investor confidence in long-term allocations [1]. - Short-term industry factors present a mixed outlook, with positive signals such as decreased coal imports and potential recovery in domestic energy consumption, while negative signals include early inventory build-up and increased supply from Xinjiang due to reduced transportation costs [2]. - Long-term industry factors indicate that the cost structure is becoming more rigid due to inflation and regulatory changes, which are expected to support coal prices despite a downward trend [3]. - The company is positioned as a leading integrated player in the coal, electricity, and transportation sectors, leveraging its high-quality resources and strategic partnerships to navigate market cycles effectively [4]. Summary by Sections Industry Short-term Factors - Positive factors include a decrease in coal imports by 742.70 million tons year-on-year, leading to a potential easing of supply-demand imbalances [2]. - Negative factors include early inventory increases due to early resumption of coal mining and reduced transportation costs that may increase overall supply [2]. Industry Long-term Factors - The coal industry is experiencing a loss rate exceeding 60% due to rising production costs driven by inflation and regulatory compliance, which is expected to support higher coal prices in the long run [3]. Profit Forecast and Valuation - The company is projected to achieve net profits of RMB 50.1 billion, RMB 50.0 billion, and RMB 50.2 billion for 2025, 2026, and 2027 respectively. The report maintains a DDM valuation approach, resulting in target prices of RMB 45.50 for A-shares and HKD 40.00 for H-shares [5][10].