Investment Rating - The report maintains a "Buy" rating for the coal mining sector, indicating a positive outlook for the industry moving forward [5]. Core Insights - The report emphasizes that the coal industry is experiencing a reversal rather than a rebound, with expectations for profitability to improve as coal prices have likely reached their lowest point [12][10]. - The report highlights that coal prices have begun to stabilize and recover, particularly in the context of both thermal and coking coal [15][19]. Summary by Sections Market Overview - As of September 1, 2025, the spot price for Q5500 thermal coal is reported at 695 CNY/ton, down 73 CNY/ton from the beginning of the year but up 77 CNY/ton from the lowest price in June [19]. - The average spot price for Q5500 thermal coal in Q2 2025 was 642 CNY/ton, reflecting a year-on-year decline of 211 CNY/ton (24.7%) and a quarter-on-quarter decline of 91 CNY/ton (12.5%) [19]. - Coking coal prices have also shown resilience, with the price for low-sulfur coking coal reported at 1480 CNY/ton, up 100 CNY/ton from the start of the year [23]. Performance Overview - The report notes that the coal sector has underperformed compared to the broader market, with the CSI 300 index rising by 16.37% from April 1 to September 1, 2025, while the coal index only increased by 8.99% [2][29]. - Among 26 sampled coal companies, 19 saw their stock prices rise, while 7 experienced declines during the same period [2]. Fund Holdings - As of Q2 2025, active funds held 0.43% of their portfolios in the coal sector, a slight decrease from Q1, while passive funds held 0.71%, also down from the previous quarter [3][34]. - The combined holding of both active and passive funds in the coal sector is 0.55%, reflecting a decline of 0.06 percentage points from Q1 2025 [3]. Financial Performance - The report indicates that coal companies' profits have been under pressure due to declining coal prices, with a total profit decline of 5.4% to 113.7% among the sampled companies [3][12]. - Notably, companies like Electric Power Energy and Kailuan achieved profit growth despite the overall downward trend in the sector [3]. Operational Insights - Coal companies are focusing on increasing production, improving quality, and reducing costs to mitigate the impact of falling prices [4][12]. - The total coal production for the sampled companies in H1 2025 was 586 million tons, a year-on-year increase of 4.5% [12]. Investment Recommendations - The report recommends stocks with strong earnings elasticity such as Lu'an Energy, Yanzhou Coal, and Jinkong Coal, while also highlighting key state-owned enterprises like China Shenhua and China Coal Energy for potential investment [10][11].