GF SECURITIES·2025-12-31 04:54Core Insights - The report indicates that the coal industry is entering a new cycle with a significant increase in value, driven by supply-demand restructuring and improved market conditions [1][4]. Group 1: Cycle Review - The coal price center has significantly increased during the 14th Five-Year Plan, and the 15th Five-Year Plan is expected to usher in a new cycle [4][15]. - The report reviews four cycles of the coal industry, highlighting that the current cycle may see a recovery from the bottom in the second half of 2025 [15][16]. - The average price of Qinhuangdao port 5500 kcal thermal coal reached 718 RMB/ton in the second half of 2025, reflecting a 6% increase compared to the first half [20][21]. Group 2: Supply Restructuring - Coal production from 2020 to 2024 increased by 23% to 4.78 billion tons, but growth is expected to slow significantly in 2025, with production growth in Xinjiang only at 2.6% [4][33]. - The report anticipates that coal production will enter a peak and decline phase, with growth rates expected to be between 0.5% and 1.0% from 2026 to 2028 [4][33]. - Regulatory policies are expected to impact coal production, potentially leading to negative growth in certain periods [4][33]. Group 3: Demand Restructuring - The demand for coal is expected to maintain resilience, with electricity consumption projected to grow at around 5% over the next five years, driven by new manufacturing and increased electrification [4][33]. - The report notes that while coal consumption is expected to decline in the short term due to electricity demand pressures, it is likely to recover as macroeconomic policies strengthen in 2026 [4][33]. - Chemical demand is projected to grow at approximately 5%, while declines in steel and construction materials are expected to narrow [4][33]. Group 4: Global and Commodity Perspectives - The report highlights that global coal production is expected to decline, while Southeast Asian demand is projected to grow by 3-5% from 2025 to 2030 [4][33]. - Compared to other commodities, coal has shown weaker performance, with the copper-coal ratio and gold-coal ratio at historical highs [4][33]. - The coal industry's share of industrial profits has dropped to historical lows, while the electricity sector's profit share has reached a high of 10% [4][33]. Group 5: Overall Viewpoint - The report concludes that the coal price center is expected to rise to around 750 RMB/ton in 2026, with leading companies offering dividend yields of 4-6% [4][33]. - Key companies identified include China Shenhua, Yanzhou Coal, and Shaanxi Coal, which are expected to maintain stable profitability [4][33]. - The report emphasizes that after a pessimistic outlook on coal prices is reversed, valuation elasticity is likely to become apparent [4][33].