Core Viewpoint - The company reported a significant decline in net profit for the first half of 2025, primarily due to decreased production and sales in the coal segment, alongside challenges in pricing and margins [1]. Group 1: Coal Segment Performance - The company's coal production was 8.908 million tons, a year-on-year decrease of 13.7%, while sales were 6.476 million tons, down 19.4%, mainly due to the closure of the Zhuzhuang mine (1.6 million tons/year) due to resource depletion [2]. - The average selling price of coal was 834.9 yuan/ton, a decrease of 27.0%, while the cost was 468.9 yuan/ton, down 17.0%. The gross profit per ton of coal was 366.0 yuan, reflecting a decline of 36.8% [2]. - The coal business's gross profit margin was 43.8%, a decrease of 6.8 percentage points year-on-year [3]. Group 2: Coal Chemical Segment Performance - In the coal chemical segment, production of coke, methanol, and ethanol saw year-on-year increases of 0.6%, 90.7%, and 203.4%, respectively [4]. - However, the selling prices for coke, methanol, and ethanol decreased by 33.3%, 2.1%, and 9.3%, respectively [5]. - Sales revenue for coke, methanol, and ethanol changed by -34.1%, -4.2%, and +213.8%, respectively [6]. Group 3: Resource Acquisition and Project Development - The company successfully acquired 23.47 million tons of deep resources from the Wobei mine and is advancing its chemical industry projects, including a 30,000-ton carbonate and 30,000-ton ethylamine project that has produced qualified products [7]. - The company has commenced construction on the Leimingkehua Henan Nanzhao Qingshan mine project and obtained mining rights for the Yunnan Huaping Ganqing mine, securing 34.62 million tons of limestone resources [7]. - Additionally, the company is accelerating the construction of the Tao Hutu coal mine project and power plant [7]. Group 4: Market Outlook - Since June, coal prices have rebounded due to reduced production and strong downstream demand, with the price of main coking coal at Jingtang Port rising from 1,270 yuan/ton on June 4 to 1,610 yuan/ton on August 29 [8]. - It is anticipated that with ongoing production cuts, coal prices will maintain an upward trend, leading to continued improvement in the fundamentals of the industry [8]. Group 5: Profit Forecast and Valuation - Based on the company's performance in the first half of 2025 and the recent improvement in the coal market, net profits for 2025-2027 are projected to be 1.97 billion, 3.31 billion, and 3.74 billion yuan, respectively [9]. - The corresponding price-to-earnings ratios based on the stock price as of August 29, 2025, are expected to be 17.1, 10.2, and 9.0 times, respectively [9]. - Given the anticipated improvement in the coal industry's fundamentals and the potential resumption of production at the Xinh Lake coal mine, the company maintains an "overweight" rating [9].

Investment Rating - The investment rating for the company is "Buy" (maintained) [8] Core Views - The company reported a decline in revenue and net profit for the first half of 2025, with revenue at 74.436 billion yuan, down 19.95% year-on-year, and net profit at 7.705 billion yuan, down 21.28% year-on-year [1][2] - The coal segment experienced a decrease in sales volume but managed to increase production, with a total coal output of 67.34 million tons, up 0.12% year-on-year [2] - The coal price has shown signs of recovery since June, with the price of 5500 kcal thermal coal rising from 609 yuan/ton to 704 yuan/ton, indicating potential for continued improvement in the fundamentals [5] Summary by Sections Coal Segment - The company increased its coal production while facing a decline in sales volume, achieving a total coal output of 67.34 million tons, an increase of 840,000 tons year-on-year, but a sales volume of 128.68 million tons, down 3.6% year-on-year [2] - The average selling price of self-produced coal decreased by 19.5% year-on-year to 470 yuan/ton, with significant drops in prices for both thermal coal and coking coal [2] - The coal business reported a gross profit of 14.347 billion yuan, a decrease of 55.01 billion yuan year-on-year, with a gross margin of 23.7%, down 1.8 percentage points [2] Coal Chemical Segment - The coal chemical segment saw a slight increase in production, with a total output of 2.988 million tons, up 2.1% year-on-year, and sales volume of 3.166 million tons, up 2.7% year-on-year [3] - Average selling prices for key products such as polyolefins and urea decreased significantly, impacting the gross profit, which fell to 1.416 billion yuan, down 36.0% year-on-year, with a gross margin of 15.1%, down 5.3 percentage points [3] Mining Equipment Segment - The mining equipment segment reported a revenue of 4.767 billion yuan, down 15.3% year-on-year, primarily due to a decrease in hydraulic support sales [4] - Despite the revenue decline, the segment achieved a gross profit of 0.951 billion yuan, an increase of 9.6% year-on-year, with a gross margin of 19.9%, up 4.5 percentage points [4] Profit Forecast and Valuation - The company expects a significant increase in coal prices in the second half of 2025, projecting net profits of 17.36 billion yuan, 18.02 billion yuan, and 18.22 billion yuan for 2025, 2026, and 2027 respectively, with corresponding P/E ratios of 9.2, 8.9, and 8.8 [6]

Investment Rating - The report maintains a "Buy" recommendation for key companies in the coal industry, including China Shenhua, Shaanxi Coal, and China Coal Energy [2][10]. Core Viewpoints - The report indicates that port inventory is decreasing, and the demand for coal in preparation for the summer peak is starting, suggesting that coal prices may rebound from their lows. Despite weak demand, the marginal improvement in demand could support prices [1][6]. - The report highlights that the coking coal market is under pressure due to strong supply and weak demand, with expectations of continued price weakness in the short term [2][8]. - The report emphasizes the investment value of stable high-dividend coal companies amid increasing uncertainty in international markets, suggesting that leading companies with strong cash flow and low debt are well-positioned for growth [7][10]. Summary by Sections Weekly Insights - The report notes that coal prices are expected to touch bottom and rebound due to seasonal demand and decreasing port inventories, despite ongoing weak demand [6]. Market Performance - As of May 16, the coal sector saw a weekly increase of 1.6%, outperforming the broader market indices [11][13]. Company Dynamics - The report recommends focusing on industry leaders with stable performance, such as China Shenhua, Shaanxi Coal, and China Coal Energy, as well as companies with strong cash flow growth like Jinkong Coal [2][10]. - It also mentions that companies like Shanxi Coal International and Huayang Co. are expected to see year-on-year production growth [2][10]. Price Trends - The report provides data on coal prices, indicating a decline in prices across various regions, with Qinhuangdao port's Q5500 thermal coal price reported at 618 RMB/ton, down 17 RMB/ton week-on-week [7][8].