Group 1 - The coal market is experiencing a seasonal improvement in supply and demand, with port coal prices stabilizing at 609 yuan/ton as of June 20, maintaining stability since June 5 [1] - Production in major coal-producing regions is affected by safety and environmental inspections, leading to some coal mines reducing output or undergoing maintenance, but overall supply remains stable [1] - The capacity utilization rate of sample coal mines in the Sanxi region has increased by 0.09 percentage points, indicating a slight improvement in production efficiency [1] Group 2 - On the demand side, daily coal consumption at power plants has increased, with coastal and inland power plants seeing week-on-week rises of 60,000 tons and 292,000 tons respectively, while power plant inventories are at relatively low levels compared to last year [1] - Non-electric demand, particularly from the chemical sector, remains high, with a 1.41 percentage point increase in coal consumption, while metallurgical demand shows resilience despite being in the off-season [1] - In the coking coal sector, supply continues to contract, with a 1.03 percentage point decrease in capacity utilization due to environmental inspections in Shanxi and Inner Mongolia [1] Group 3 - The coking coal demand is supported by a rebound in average daily iron and steel production, leading to improved procurement activities by coking enterprises [1] - The supply side of coke is constrained by environmental inspections and voluntary production cuts by coking enterprises, resulting in a 0.36 percentage point decrease in capacity utilization to 75.41% [1] - Overall, the coal industry maintains a supply-side constraint logic, with leading companies exhibiting characteristics of high profitability, high cash flow, high barriers to entry, high dividends, and high safety margins [1]

Investment Rating - The investment rating for the coal industry is "Outperform" [1] Core Viewpoints - The coal sector has seen a rebound, outperforming the CSI 300 index, with a 3.6% increase in May compared to a 1.8% increase in the index, resulting in a 1.7 percentage point outperformance [2] - Domestic coal supply is expected to decrease significantly by April 2025, with a year-on-year increase of approximately 18 million tons in national raw coal production, but a month-on-month decrease of about 51 million tons [2][17] - The overall demand for coal is expected to decline as April enters a demand off-season, with a slight increase in total coal consumption year-on-year [3][39] - High inventory levels at ports and key coal mines are observed, with power plant inventories showing a slight decrease [4][81] Supply - In April, domestic coal production decreased by 51 million tons month-on-month, while coal imports remained relatively low [2][25] - The total raw coal production from January to April 2024 reached 1.58 billion tons, a year-on-year increase of 6.6% [17] - The coal import volume in April was 37.83 million tons, a year-on-year decrease of 16.4% [25][28] Demand - The overall coal demand is expected to decline, with April seeing a decrease in commodity coal consumption, although chemical coal demand remains strong [3][39] - In April, the total coal consumption was 390 million tons, a year-on-year increase of 0.7% [3] - The electricity consumption in April increased by 4.7% year-on-year, but the growth rate slightly declined compared to March [42] Inventory - Port and key coal mine inventories remain high, with main ports maintaining elevated stock levels [4][81] - As of May 26, the total inventory at major ports was 76.97 million tons, showing a year-on-year increase of 19.42% [83] - The inventory of the six major power generation groups was slightly lower year-on-year, indicating a potential risk of self-ignition and heat value decline due to high temperatures [81] Price - As the peak season approaches, the price of thermal coal has stabilized, while coking coal prices are under downward pressure [4][5] - The market sentiment has improved towards the end of May, leading to a halt in the decline of coal prices [4] Investment Suggestions - It is recommended to focus on coal companies with stable performance, such as China Shenhua, China Coal Energy, and Shaanxi Coal and Chemical Industry [5] - Attention should also be given to growth-oriented companies like Electric Power Investment Energy, Jinko Coal Industry, and Huaibei Mining [5]

Summary of Coal Industry Conference Call Industry Overview - The coal industry is experiencing a significant decline in net profit, with a projected decrease of 19% in 2024, amounting to 146.5 billion yuan. The decline is more pronounced in coking coal, which is expected to drop by 46%, while thermal coal shows a smaller decline of 10% [1][8] - In Q1 2025, the overall industry performance is expected to decline by 30% year-on-year, resulting in a profit of 28.7 billion yuan. Both thermal and coking coal are experiencing declines, with thermal coal down by 25% and coking coal down by 59% [1][9] Supply and Demand Dynamics - The raw coal production in 2024 is projected to increase to 4.759 billion tons, primarily due to recovery in production during the second half of the year and increased output from Xinjiang. In Q1 2025, production is expected to grow by 8.8% year-on-year [4][6] - Despite the increase in production, there are concerns about inventory levels, which may be overstated due to coal being stockpiled at pit heads. The actual market circulation of coal may not be as high as production figures suggest [5][6] - The demand for coal has weakened significantly due to a warm winter and reduced electricity consumption, leading to a historical high of 55% of coal companies operating at a loss by March 2025 [1][7] Company Performance - Companies with a high proportion of long-term contracts, such as Shaanxi Coal and Shenhua, have experienced smaller declines in performance compared to the industry average. Electric Power Investment's performance improved due to better profits from electrolytic aluminum and increased sales [1][10] - Coking coal companies have seen an average decline of 60%, but Shanxi Coking Coal performed relatively well due to effective cost control [11] Dividend Trends - China Shenhua has the highest dividend payout ratio at 76.5%, maintaining the same amount as in 2023. Other companies like Haohua Energy and Shanxi Coal International have also increased their dividends significantly [12][13] Valuation and Market Sentiment - The price-to-earnings (P/E) ratio for thermal coal is slightly below historical averages, while the price-to-book (P/B) ratio is relatively high. In contrast, coking coal's P/E ratio is below historical averages, indicating weak market expectations for its dividend attributes [18] - The coal sector is expected to see a rebound if policy stimuli are introduced, particularly for coking coal and coke [18] Future Outlook - For Q2 2025, thermal coal is expected to perform well due to strong domestic demand, although high port inventories may lead to price weakness in early May. Companies like Shaanxi Coal and Shenhua are recommended for their strong dividend yield [19][20] - Coking coal may see a rebound if policy support is provided, but ongoing steel production restrictions could continue to suppress demand [21] Key Companies to Watch - Recommended companies include Shenhua, Zhongmei, Electric Power Investment, and Xinjie Energy, with a focus on those with stable long-term profits and growth potential [22][23]