Investment Rating - The report rates the coal industry as "Overweight" [4] Core Views - The coal industry has shown a clear trend of recovery in Q3 2025, confirming that the bottom was reached in Q2 2025. It is expected that Q4 will see a full recovery to the levels seen at the beginning of the year [2][7] - The report recommends leading companies such as China Shenhua, Shaanxi Coal, and China Coal Energy, while also continuing to recommend Yanzhou Coal and Jinneng Holding [4][10] Summary by Sections Investment Highlights - In Q3 2025, the thermal coal sector exhibited a clear trend of revenue performance improvement, with net profit increasing by over 30% quarter-on-quarter. The bottom of the sector cycle was confirmed in Q2 2025 [7] - For the first three quarters of 2025, the electricity generation from thermal power accounted for 64.7% of total generation, remaining the primary source. Total electricity consumption reached 7.8 trillion kWh, a year-on-year increase of 4.6% [7][14] - National coal production in the first three quarters of 2025 increased by 2% year-on-year, with raw coal production at 3.57 billion tons [7][26] - The average price of thermal coal (Q5500) at Huanghua Port was 683.7 RMB/ton, a year-on-year decrease of 21.9% [7][33] Industry Review - Q2 2025 marked the official bottom of the current coal price decline cycle, with a narrowing of price declines in Q3. The total coal production for 2025 is expected to remain stable, with a slight year-on-year decrease in Q4 due to "overproduction" checks [13] - The report indicates that the demand for thermal coal is recovering, with Q3 showing a significant increase in electricity consumption and generation [14] Performance Analysis - In Q3 2025, the coal industry achieved revenues of 638.5 billion RMB, a quarter-on-quarter increase of 3.9% but a year-on-year decrease of 17.6%. Total profit was 77.28 billion RMB, down 45.8% year-on-year but up 12.4% quarter-on-quarter [8][51] - The coal sector's performance improved in Q3 2025, with a revenue of 297.9 billion RMB, a year-on-year decline of 16.5% but a quarter-on-quarter increase of 1.5% [8][53] Financial Analysis - The report notes that the operating cash flow of the coal sector has decreased significantly year-on-year, but there has been an improvement compared to H1 2025. The debt ratio of the coal sector has been continuously optimized, decreasing from 49.2% in 2020 to 46.8% in Q3 2025 [9][40] Outlook for 2026 - The report expresses optimism for a new upward cycle in the coal industry starting in 2026, driven by demand growth and stable supply. It predicts that coal prices may return to above 800 RMB/ton in the second half of 2026 [10][11]

Group 1 - The coal ETF (515220) experienced a rebound, rising over 1.6% during the trading session, with a transaction volume exceeding 160 million yuan and a net inflow of over 130 million yuan in the past five days [1] - High temperatures have been reported across regions from the Sichuan Basin to the western Huanghuai area, which is expected to increase seasonal consumption as the subtropical high pressure extends westward [1] - Power plant inventories are at a relatively low level compared to the previous year, with coastal and inland power plants holding 120.06 million tons of coal as of June 18, 2025, which is 5.739 million tons lower than the same period in 2024 [1] Group 2 - The coal supply and demand situation is improving as the peak season approaches, with port coal prices stabilizing at 609 yuan per ton since June 5, and pithead prices beginning to rise [1] - The pithead prices in Shanxi, Inner Mongolia, and Shaanxi have increased by 11.00 yuan/ton, 2.00 yuan/ton, and 10.00 yuan/ton week-on-week, respectively [1] - The overall production and imports remain stable, with an increase in daily consumption at power plants, indicating a gradual recovery in supply and demand [1]