Guohai Securities·2025-09-10 05:03Investment Rating - The report maintains a "Recommended" rating for the coal mining industry [1] Core Viewpoints - The coal price has reached a bottom, leading to a potential investment opportunity as prices rebound alongside low sector congestion [1][12] - The performance of the coal mining sector in the first half of 2025 has been negatively impacted by falling coal prices, with significant declines in revenue and profit for major coal companies [33][36] - Despite the challenges, the report suggests that the current market pessimism regarding coal prices has been largely priced in, indicating a potential for recovery [12] Summary by Sections 1. Overview of H1 2025 - In H1 2025, the coal supply-demand balance was loose, resulting in a decline in the average coal price [19][21] - The total revenue for 28 key coal companies was CNY 553.918 billion, down 17.8% year-on-year, with net profit dropping 31.5% to CNY 72.284 billion [33][36] - Coal production increased by 1.6% to 615 million tons, while sales volume decreased by 1.8% to 561 million tons [50] 2. Financial Performance - The average sales price of coal fell by 20% to CNY 480 per ton, while the average cost decreased by 9% to CNY 306 per ton, leading to a 33% drop in gross profit [5][8] - The average gross margin for the 28 coal companies was 36%, down 7.4 percentage points year-on-year [8] - Operating cash flow decreased by 27% to CNY 1,042.20 billion, with a slight increase in the average debt-to-asset ratio to 53.2% [9][12] 3. Market Dynamics - The coal price for Q2 2025 continued to decline, but signs of recovery were noted in Q3 due to seasonal demand and supply constraints [10][12] - The report highlights that the coal sector's low congestion levels and high dividend yields present a compelling case for bottom-fishing investments [12] 4. Investment Strategy - The report recommends focusing on companies with strong fundamentals and cash flow, such as China Shenhua, Shaanxi Coal, and Yanzhou Coal [12][14] - It emphasizes the importance of monitoring the evolving supply-demand dynamics and potential policy impacts on the coal market [12][19]