Core Viewpoint - The long-term price inversion of annual coal contracts has been resolved, boosting market confidence as the Qinhuangdao port's 5500 kcal thermal coal spot price rose to 667 RMB/ton on August 4, 2025, exceeding the annual contract price for the same grade coal [1][2][3]. Group 1: Market Dynamics - The recent price inversion lasted from February 28, 2025, to August 4, 2025, leading to a decline in contract fulfillment rates during this period [3]. - The combination of peak summer demand and anti-involution policies has accelerated the rise in market coal prices, restoring market confidence [3]. Group 2: Price Expectations - The bottom for coal prices has been established, with expectations for price increases potentially exceeding market forecasts [3]. - The rise in coal prices began with thermal coal, but the increase in coking coal has outpaced expectations, indicating a stronger market than anticipated [3]. Group 3: Stock Market Implications - Coal stocks are responding positively to favorable market conditions, with significant upward potential remaining [3]. - The market is increasingly focused on policy implementation and supply-demand dynamics, with several short-term supply constraints expected to benefit coal prices [3]. Group 4: Investment Recommendations - Companies to watch include Huayang Co., Jinkong Coal, Shanmei International, Lu'an Environmental Energy, Shanxi Coal, Pingmei Shares, and Huaibei Mining, which are considered elastic stocks [4]. - Leading coal enterprises such as Shaanxi Coal, China Coal Energy, and China Shenhua are still viewed as having high allocation value [4].

Core Viewpoint - The research report from CICC suggests that coal prices are likely to rebound in the second half of the year due to rational supply release and marginal demand improvement, which will aid in the recovery of industry profitability [1] Industry Summary - The coal supply is expected to be released more rationally in the second half of the year, which, combined with demand improvements, may lead to an overall rebound in coal prices [1] - Long-term sustainability of industry profitability is considered crucial, with expectations that the long-term coal price center will rise alongside marginal cost increases [1] - Companies with superior resource endowments and lower costs are anticipated to navigate through the economic cycle successfully [1]

Investment Rating - The investment rating for the coal mining industry is "Positive" [2] Core Viewpoints - The current phase is the early stage of a new upward cycle in the coal economy, with a resonance between fundamentals and policies, making it an opportune time to accumulate coal sector investments [11][12] - The underlying investment logic of coal capacity shortages remains unchanged, with short-term supply-demand balance and long-term gaps still present [11][12] - Coal prices have established a bottom and are trending towards a new platform, with high profitability, cash flow, return on equity (ROE) of 10-20%, and dividend yields over 5% for quality coal companies [11][12] - The coal sector is relatively undervalued, with overall valuation expected to improve, supported by high premiums in the primary mining rights market and a price-to-book (PB) ratio around 1 for most companies [11][12] - The coal sector is expected to maintain a tight supply-demand balance over the next 3-5 years, with quality coal companies exhibiting high barriers to entry, cash flow, dividends, and yield characteristics [11][12] Summary by Sections Coal Price Tracking - As of July 12, the market price for Qinhuangdao port thermal coal (Q5500) is 624 CNY/ton, an increase of 8 CNY/ton week-on-week [28] - The price for coking coal at Jing Tang port is 1310 CNY/ton, up 60 CNY/ton week-on-week [30] Coal Supply and Demand Tracking - The capacity utilization rate for sample thermal coal mines is 93.7%, down 0.3 percentage points week-on-week, while the utilization rate for coking coal mines is 85.52%, up 1.7 percentage points [11][46] - Daily coal consumption in coastal provinces increased by 6.10 thousand tons/day (+2.92%) week-on-week, while inland provinces saw a decrease of 9.50 thousand tons/day (-2.61%) [11][47] Coal Inventory Situation - As of July 10, coal inventory in coastal provinces decreased by 785 thousand tons (-2.18%) week-on-week, while inland provinces saw a slight decrease of 0.70 thousand tons (-0.01%) [11][47] Key Companies to Watch - Focus on stable and robust performers such as China Shenhua, Shaanxi Coal and Chemical Industry, and China Coal Energy [12] - Attention to companies with significant upside potential like Yanzhou Coal Mining, China Power Investment, and Guanghui Energy [12]

Investment Rating - The investment rating for the coal mining sector is "Positive" [2] Core Viewpoints - The current phase is seen as the beginning of a new upward cycle in the coal economy, with a resonance between fundamentals and policies, making it an opportune time to accumulate coal sector stocks [11][12] - The coal price has stabilized and is expected to continue its upward trend due to safety inspections in production areas, ongoing inventory depletion at ports, and the initiation of peak season demand [11][12] - The valuation of the coal sector remains low, and the continuous improvement in fundamentals and price expectations has not yet been fully reflected, highlighting the sector's investment value [11][12] Summary by Sections Coal Price Trends - As of June 28, the market price for Qinhuangdao port thermal coal (Q5500) is 614 CNY/ton, up 4 CNY/ton week-on-week [11][29] - The international thermal coal offshore price for Newcastle NEWC5500 is 65.3 USD/ton, down 1.3 USD/ton week-on-week [11][29] - The price for coking coal at Jing Tang port remains stable at 1250 CNY/ton [11][31] Supply and Demand Analysis - The capacity utilization rate for sample thermal coal mines is 92.9%, down 1.6 percentage points week-on-week, while the coking coal mine utilization rate is 82.48%, down 2.0 percentage points [11][48] - Daily coal consumption in inland provinces has increased by 14.5 thousand tons/day (+4.13%), while consumption in coastal provinces has decreased by 1.6 thousand tons/day (-0.84%) [11][49] Investment Recommendations - The report suggests focusing on stable and high-performing companies such as China Shenhua, Shaanxi Coal and Chemical Industry, and China Coal Energy, as well as those with significant upside potential like Yanzhou Coal Mining and China Power Investment [12][13] - The coal sector is characterized by high performance, high cash flow, and high dividend yields, making it an attractive investment opportunity [12][13]