Summary of Key Points from the Conference Call Industry Overview - **Industry Focus**: Thermal Coal in China - **Data Source**: Sxcoal, a consultant tracking high-frequency demand trends in China Core Insights - **Production Trends**: - Thermal coal output from 100 sample mines was **12,187 kt** for the week of December 4-10, 2025 - This represents a **0.5% decrease week-over-week (WoW)**, a **3.6% decrease year-over-year (YoY)**, and a **3.1% decrease YoY on the lunar calendar** [2] - Breakdown of output by region: - Shanxi: **2,960 kt** (-0.9% WoW, -1.1% YoY) - Shaanxi: **3,516 kt** (-1.1% WoW, -9.5% YoY) - Inner Mongolia: **5,711 kt** (+0.1% WoW, -0.9% YoY) [2] - **Utilization Ratios**: - Overall utilization ratio for sample mines was **90.2%**, down **0.5 percentage points (ppt) WoW** and **3.4 ppt YoY** - Regional utilization ratios: - Shanxi: **86.0%** (-0.8 ppt WoW, -1.0 ppt YoY) - Shaanxi: **89.7%** (-1.0 ppt WoW, -9.4 ppt YoY) - Inner Mongolia: **93.0%** (+0.1 ppt WoW, flat YoY) [3] - **Inventory Levels**: - Total coal inventory in sample mines was **3,253 kt** on December 10, 2025, reflecting a **1.4% increase WoW** but a **2.8% decrease YoY** - Regional inventory levels: - Shanxi: **866 kt** (+1.4% WoW, -1.0% YoY) - Shaanxi: **698 kt** (+2.0% WoW, -15.4% YoY) - Inner Mongolia: **1,689 kt** (+1.1% WoW, +2.5% YoY) [4] Investment Recommendations - **Top Picks in the Sector**: - Hongqiao - Chalco H/A - Zijin Mining H/A - CATL-A [1] Risks Identified - **Aluminum Corporation of China (Chalco)**: - Target price for A-share: **Rmb14.77**, based on **2.93x 2026E PB** - Risks include lower-than-expected aluminum prices, higher costs, and potential government policy changes [14][15] - **Contemporary Amperex Technology Co. Ltd. (CATL)**: - Target price: **Rmb571/share**, based on **17.3x 2026E EV/EBITDA** - Risks include lower EV demand and increased competition in the battery market [18] - **China Hongqiao**: - Target price: **HK$36.0/share**, based on **11.4x 2026E PE** - Risks include cost overruns and economic slowdown [19][20] - **Zijin Mining**: - Target price for A-share: **Rmb35.5/share**, based on DCF valuation - Risks include lower gold and copper prices and capex overruns [22][25] Additional Notes - **Market Positioning**: The report indicates a pecking order of demand across various sectors, with aluminum and copper leading, followed by battery materials and coal [1] - **Year-to-Date (YTD) Production**: YTD thermal coal output was **606 million tonnes (mnt)**, reflecting a **2.4% increase YoY** [2]