Investment Rating - The coal industry is rated as "stronger than the market" [6] Core Viewpoints - The report emphasizes that the fundamental goal is to reverse the Producer Price Index (PPI), which has been declining, with July's PPI showing a year-on-year decrease of 3.6%. The stability of coal prices is closely linked to PPI, and the lowest coal prices in 2025 may represent a policy bottom, with expectations for more supply-side policies to be introduced [5][6] - The coal industry is currently undergoing a significant transformation, with strict capacity controls and increasing operational difficulties leading to a tighter supply. The report suggests that coal will remain a key energy source in the short term, despite macroeconomic weaknesses affecting demand [5][6] - The report identifies several investment opportunities in the coal sector, focusing on companies with strong resource endowments, stable operating performance, and high or potentially increasing dividend ratios [6] Summary by Sections 1. Market Overview - The coal index increased by 0.31% this week, outperforming the Shanghai and Shenzhen 300 index, which decreased by 0.81%. Year-to-date, the coal index has dropped by 9.32%, while the Shanghai and Shenzhen 300 index has risen by 13.35% [11][12] 2. Thermal Coal 2.1 Key Indicators - As of September 5, 2025, the Qinhuangdao 5500K thermal coal price was 679 CNY/ton, down 1.6% week-on-week. The average daily production from 462 sample mines was 5.379 million tons, a year-on-year decrease of 6.5% [3][21] 2.2 Annual Long-term Contract Price - The long-term contract price for Qinhuangdao thermal coal (Q5500) was 674 CNY/ton, with a month-on-month increase of 0.9% and a year-on-year decrease of 3.3% [23] 2.3 Spot Prices - The report details various spot prices for thermal coal across different regions, indicating slight fluctuations in prices [27][28] 2.4 Supply and Demand - The report notes a slight decrease in daily consumption by major power plants, with a total inventory of 13.388 million tons, reflecting a minor decline [37][48] 3. Coking Coal 3.1 Key Indicators - The report highlights the price changes for coking coal, with the main coking coal price at Jing Tang Port dropping to 1540 CNY/ton, a decrease of 4.3% week-on-week [62][63] 3.2 Spot Prices - Various spot prices for coking coal are provided, showing both increases and decreases across different regions [66][68]

Core Insights - The China Steel Association reported a continued decline in procurement costs for coking coal and a mixed trend for iron ore in July 2025, with most categories showing significant year-on-year decreases in costs [1] Group 1: Coking Coal - The weighted average procurement cost of coking coal in July was 1100.18 CNY/ton, a decrease of 32.00 CNY/ton or 2.83% month-on-month [2] - From January to July, the cumulative average procurement cost was 1250.49 CNY/ton, down 634.14 CNY/ton or 33.65% year-on-year [2] - The lowest five companies had an average procurement cost of 1015.95 CNY/ton, which is 234.54 CNY/ton or 18.76% lower than the average [4] Group 2: Spraying Coal - The weighted average procurement cost of spraying coal in July was 841.62 CNY/ton, a decrease of 7.59 CNY/ton or 0.89% month-on-month [6] - The cumulative average procurement cost from January to July was 938.94 CNY/ton, down 198.76 CNY/ton or 17.47% year-on-year [6] - The lowest five companies had an average procurement cost of 727.16 CNY/ton, which is 211.78 CNY/ton or 22.56% lower than the average [8] Group 3: Metallurgical Coke - The weighted average procurement cost of metallurgical coke in July was 1303.66 CNY/ton, a decrease of 51.49 CNY/ton or 3.80% month-on-month [11] - The cumulative average procurement cost from January to July was 1482.27 CNY/ton, down 646.01 CNY/ton or 30.35% year-on-year [11] - The lowest five companies had an average procurement cost of 1279.56 CNY/ton, which is 202.71 CNY/ton or 13.68% lower than the average [13] Group 4: Domestic Iron Concentrate - The weighted average procurement cost of domestic iron concentrate in July was 745.01 CNY/ton, an increase of 1.73 CNY/ton or 0.23% month-on-month [14] - The cumulative average procurement cost from January to July was 769.34 CNY/ton, down 119.02 CNY/ton or 13.40% year-on-year [14] - The lowest five companies had an average procurement cost of 630.96 CNY/ton, which is 131.37 CNY/ton or 17.23% lower than the average [16] Group 5: Imported Powder Ore - The weighted average procurement cost of imported powder ore in July was 725.51 CNY/ton, an increase of 1.54 CNY/ton or 0.21% month-on-month [19] - The cumulative average procurement cost from January to July was 754.60 CNY/ton, down 124.77 CNY/ton or 14.19% year-on-year [19] - The lowest five companies had an average procurement cost of 713.04 CNY/ton, which is 59.06 CNY/ton or 7.65% lower than the average [21] Group 6: Scrap Steel - The weighted average procurement cost of scrap steel in July was 2146.37 CNY/ton, an increase of 18.20 CNY/ton or 0.86% month-on-month [25] - The cumulative average procurement cost from January to July was 2180.06 CNY/ton, down 358.06 CNY/ton or 14.11% year-on-year [25] - The lowest five companies had an average procurement cost of 1948.06 CNY/ton, which is 232.00 CNY/ton or 10.64% lower than the average [27] Group 7: Silicon Manganese Alloy - The weighted average procurement cost of silicon manganese alloy in July was 5143.37 CNY/ton, an increase of 60.61 CNY/ton or 1.19% month-on-month [30] - The cumulative average procurement cost from January to July was 5389.77 CNY/ton, down 793.53 CNY/ton or 12.83% year-on-year [30] - The lowest five companies had an average procurement cost of 5104.90 CNY/ton, which is 284.87 CNY/ton or 5.29% lower than the average [32] Group 8: Manganese Iron Alloy - The weighted average procurement cost of manganese iron alloy in July was 5973.38 CNY/ton, a decrease of 46.72 CNY/ton or 0.78% month-on-month [35] - The cumulative average procurement cost from January to July was 6274.58 CNY/ton, down 341.48 CNY/ton or 5.16% year-on-year [35] - The lowest five companies had an average procurement cost of 4848.24 CNY/ton, which is 1426.34 CNY/ton or 22.73% lower than the average [37]

Core Insights - The company reported a revenue of 14.069 billion yuan for the first half of 2025, a year-on-year decrease of 20.31%, and a net profit attributable to shareholders of 1.348 billion yuan, down 39.44% year-on-year [1] - In Q2 2025, the company achieved a revenue of 7.101 billion yuan, a decline of 21.05% year-on-year, with a net profit of 691 million yuan, down 26.39% year-on-year [1] - Coal prices have decreased, while production remained stable, leading to a decline in sales [1] Revenue and Sales Performance - In H1 2025, the company produced 28.63 million tons of raw coal, an increase of 3.5% year-on-year, and sold 25.25 million tons of commercial coal, up 2.9% year-on-year [1] - The sales of injection coal reached 10.83 million tons, a year-on-year increase of 15.7% [1] - In Q2 2025, coal production was 15.06 million tons, up 4.4% year-on-year, and sales were 13.38 million tons, an increase of 5.0% year-on-year, with injection coal sales at 5.66 million tons, up 18.7% year-on-year [1] Pricing and Cost Analysis - The average selling price of coal was 516 yuan per ton, down 24.4% year-on-year, with Q2 pricing at 478 yuan per ton, a decrease of 29.5% year-on-year [1] - The company achieved a cost of 318 yuan per ton in H1 2025, a reduction of 14.4% year-on-year, with total coal costs of 8 billion yuan, down 12.0% year-on-year [2] - In Q2, the cost per ton was 298 yuan, down 18.4% year-on-year, with total costs of 3.99 billion yuan, a decrease of 14.3% year-on-year [2] Profitability and Future Prospects - The company reported a gross profit of 5 billion yuan from coal operations in H1 2025, a decline of 34.5% year-on-year, with Q2 gross profit at 2.4 billion yuan, down 39.5% year-on-year [2] - The company has several ongoing and planned mining projects, with a total of 8.5 million tons per year in construction capacity, which is expected to enhance production in the future [2] - The company has maintained a high dividend payout ratio of over 50% from 2022 to 2024, with cash reserves of 12.3 billion yuan as of mid-2025, indicating strong liquidity [2] Earnings Forecast - The projected net profit attributable to shareholders for 2025-2027 is 1.942 billion, 2.036 billion, and 2.139 billion yuan, reflecting a year-on-year change of -22.62%, +6.19%, and +9.58% respectively [3] - The expected earnings per share (EPS) for the same period are 0.65, 0.68, and 0.72 yuan [3] - As the peak demand season approaches, the company is expected to benefit from increased metallurgical coal demand and potential price increases [3]

Core Viewpoint - Yanzhou Coal Mining Company (兖矿能源) reported a decline in sales revenue and net profit for the first half of 2025, but the stock price increased by over 4% due to positive market sentiment and future growth prospects from recent acquisitions [1]. Financial Performance - Sales revenue for the first half of 2025 was 53.966 billion RMB, a year-on-year decrease of 13.17% [1]. - Shareholder profit attributable to the company was 4.731 billion RMB, down 38.7% year-on-year [1]. - The board proposed an interim dividend of 0.18 RMB per share (including tax), totaling 1.8 billion RMB in dividends [1]. Share Buyback and Shareholder Commitment - The company plans to spend 0.5 to 1 billion RMB on repurchasing A-shares and 1.5 to 4 billion RMB on repurchasing H-shares [1]. - The controlling shareholder has committed to "no reduction in holdings and timely increase in holdings" [1]. Acquisition and Resource Expansion - The acquisition of Northwest Mining added 6.352 billion tons of coal resources and increased recoverable reserves by 3.652 billion tons [1]. - The company produces various types of coal, including thermal coal, injection coal, and coking coal, to meet diverse market demands [1]. Future Outlook - According to Minsheng Securities, the consolidation of Northwest Mining in Q3 2025, along with a rebound in coal prices in the second half of the year, is expected to improve the company's performance [1].

Core Viewpoint - Yanzhou Coal Mining Company Limited (兖矿能源) reported a decline in sales revenue and net profit for the first half of 2025, but the stock price increased by over 4% due to positive market sentiment and future growth prospects from acquisitions and planned share buybacks [1]. Financial Performance - Sales revenue for the first half of 2025 was 53.966 billion RMB, a decrease of 13.17% year-on-year [1]. - Shareholder profit attributable to the company was 4.731 billion RMB, down 38.7% compared to the previous year [1]. - The board proposed an interim dividend of 0.18 RMB per share, totaling 1.8 billion RMB in dividends [1]. Share Buyback and Shareholder Commitment - The company plans to repurchase A-shares with an investment of 50 to 100 million RMB and H-shares with an investment of 150 to 400 million RMB [1]. - The controlling shareholder has committed to "no reduction in holdings and timely increase in holdings" [1]. Acquisition and Resource Expansion - The acquisition of Northwest Mining added 6.352 billion tons of coal resources and increased the recoverable reserves by 3.652 billion tons [1]. - The company produces various types of coal, including thermal coal, injection coal, and coking coal, to meet diverse market demands [1]. Future Outlook - According to Minsheng Securities, the consolidation of Northwest Mining in Q3 2025, along with a rebound in coal prices in the second half of the year, is expected to improve the company's performance [1].

Core Viewpoint - Yanzhou Coal Mining Company Limited (兖矿能源) reported a decrease in sales revenue and profit for the first half of 2025, indicating challenges in the coal industry amidst ongoing market fluctuations [1] Financial Performance - Sales revenue for the six months ending June 30, 2025, was 53.966 billion RMB, a year-on-year decrease of 13.17% [1] - Shareholder profit was 4.731 billion RMB, down 38.7% compared to the previous year [1] - Basic earnings per share were 0.47 RMB [1] Resource Development - The company has established coal production bases in Shandong, Inner Mongolia, Xinjiang, and Australia, creating a strong resource aggregation advantage [1] - As of the end of 2024, the coal resource amount is 46.4 billion tons (JORC standard), ranking among the top in the industry [1] - The acquisition of Northwest Mining added 6.352 billion tons of coal resources and increased recoverable reserves by 3.652 billion tons [1] Product Diversification - The company produces various types of coal, including thermal coal, injection coal, and coking coal, to meet diverse market demands [1] - In addition to coal, the company is actively expanding into other mineral sectors, holding six potash mining rights in Canada with proven high-quality potassium chloride resources of 1.7 billion tons [1] - Plans are in place to develop the Caosiyou Molybdenum Mine in Inner Mongolia, which has a resource amount of 1.04 billion tons, supporting sustainable development [1]

Investment Rating - The investment rating for the company has been upgraded to "Buy" with a target price of RMB 17.69 [2][8][10] Core Views - The report highlights a recovery in gross profit margin and anticipates improved profitability in the second half of the year [1][10] - The company has demonstrated strong cost control, leading to a sequential recovery in performance despite a decline in coal prices [6][8] - The forecast for net profit attributable to the parent company has been raised significantly for 2025-2027, reflecting a positive outlook on coal prices and operational efficiency [8][20] Financial Data Summary - As of August 28, the closing price was RMB 13.04, with a market capitalization of RMB 39,008 million [2] - The company reported a revenue of RMB 14.069 billion for the first half of 2025, down 20.3% year-on-year, and a net profit of RMB 1.348 billion, down 39.4% year-on-year [6] - The gross profit margin for the second quarter of 2025 improved to 39.5%, up 1 percentage point from the previous quarter [6][8] - The company’s production and sales of raw coal reached 28.63 million tons and 25.25 million tons respectively in the first half of 2025, showing a year-on-year increase of 3.5% and 2.9% [6][7] Earnings Forecast and Valuation - The earnings forecast for 2025 has been adjusted to a net profit of RMB 3.3 billion, reflecting a year-on-year increase of 34.7% [8][20] - The report estimates the company's EBITDA for 2026 at RMB 10,130.4 million, applying a valuation multiple of 3.59x EV/EBITDA [21] - The projected dividend yield is expected to increase to 5.60% by 2027 [5][8]

Core Viewpoint - The company reported a decline in revenue and net profit for the first half of 2025, indicating challenges in the coal market and the impact of price drops on profitability [1][4]. Financial Performance - In H1 2025, the company achieved revenue of 14.069 billion yuan, a year-on-year decrease of 20.31% - The net profit attributable to shareholders was 1.348 billion yuan, down 39.44% year-on-year - The non-recurring net profit was 1.147 billion yuan, reflecting a 49.00% year-on-year decline [1]. Production and Sales - The company increased the production and sales of blown coal to mitigate the impact of price declines on profits - In H1 2025, the company reported sales revenue from commodity coal of 13.04 billion yuan, a decrease of 22.3% year-on-year - The gross margin for commodity coal was 38.4%, down 7.2 percentage points year-on-year - The company produced 28.63 million tons of raw coal, an increase of 3.5% year-on-year, and sold 25.25 million tons of commodity coal, up 2.9% year-on-year - The average selling price of commodity coal was 516.2 yuan/ton, a decrease of 167 yuan/ton year-on-year [2][4]. Strategic Adjustments - The company is closing small loss-making coal mines to reduce losses - The company announced the closure of the Xidong Coal Mine, which had been operating since June 30, 2015, with a certified capacity of 600,000 tons/year but produced less than 300,000 tons/year due to resource constraints - The mine reported losses of 210 million yuan, 300 million yuan, and 75 million yuan from 2022 to 2024, with a continued reduction in losses in H1 2025 to 1.6 million yuan [3][4]. Market Outlook - The coal market is under pressure, but the company maintained stable production and sales - National safety production measures and adverse weather conditions have slowed the resumption of coal production, potentially limiting supply increases in the second half of the year - The demand for coal is expected to rise during the peak summer season, with a recovery in thermal power demand and a decrease in hydropower contributions - The company anticipates a gradual improvement in performance due to the recovery of coal prices from their lows [4]. Profit Forecast - The company adjusted its profit forecasts for 2025-2027, estimating net profits of 2.48 billion yuan, 2.946 billion yuan, and 3.250 billion yuan, respectively - The price-to-earnings ratios for these years are projected to be 15.7, 13.2, and 12.0 times, respectively [4].

Investment Rating - The investment rating for the company is "Recommended" [1] Core Views - The company is expected to see gradual improvement in performance as coal prices rebound from their bottom levels [1][8] - Despite a challenging coal market in the first half of 2025, the company maintained stable production and sales, particularly in the higher-priced injection coal segment [8] - The company has successfully acquired exploration rights for additional coal resources, which is expected to enhance its resource base in the coming years [7][8] Financial Summary - In the first half of 2025, the company reported revenue of 14.069 billion yuan, a year-on-year decrease of 20.31% [4] - The net profit attributable to shareholders was 1.348 billion yuan, down 39.44% year-on-year, while the non-recurring net profit was 1.147 billion yuan, a decline of 49.00% [4] - The company's coal sales revenue was 13.04 billion yuan, with a gross margin of 38.4%, down 7.2 percentage points year-on-year [7] - The company produced 28.63 million tons of raw coal, an increase of 3.5% year-on-year, while the sales volume of commodity coal was 25.25 million tons, up 2.9% year-on-year [7] Future Projections - Revenue projections for 2025-2027 are 31.547 billion yuan, 33.942 billion yuan, and 35.038 billion yuan, respectively, with corresponding net profits of 2.480 billion yuan, 2.946 billion yuan, and 3.250 billion yuan [6][8] - The expected price-to-earnings ratios for 2025-2027 are 15.7, 13.2, and 12.0 times, respectively [8]

Summary of Lu'an Huaneng Conference Call Company Overview - **Company**: Lu'an Huaneng - **Industry**: Coal Industry Key Financial Metrics - **Revenue**: 14 billion CNY, a decrease of 3.6 billion CNY year-on-year, but stable quarter-on-quarter [2][3] - **Net Profit**: 1.348 billion CNY, a decline of 39% year-on-year, with slight growth quarter-on-quarter, primarily impacted by coal prices [2][3] - **Coal Production Target**: 50 million tons for the year, expected to be on par with last year, with no new production capacity [2][9] Production and Sales Insights - **Coal Production**: 28.63 million tons in the first half, an increase of approximately 960,000 tons year-on-year, and a quarter-on-quarter increase of 1.49 million tons [3] - **Coal Sales**: 25.3023 million tons, an increase of 700,000 tons year-on-year, and a quarter-on-quarter increase of 1.49 million tons [3] - **July Production Decline**: Mainly due to mine maintenance and rainy season safety measures, with limited impact from overproduction checks [4] Cost Management - **Cost Reduction**: Achieved through strict cost control measures, with expectations to maintain low costs in the second half, though uncertainty exists for Q4 [5][13] - **Employee Compensation**: Decrease in employee salaries contributed to cost reduction, but this is not sustainable; costs may rise in the second half [5][17][18] Inventory and Pricing - **Coal Inventory**: Currently low, particularly for injection coal, leading to supply shortages [10][19] - **Coal Prices**: - Long-term supply coal price: 570 CNY/ton - Market metallurgical red mixed coal price: approximately 750 CNY/ton - Standard injection coal price: 1,050-1,070 CNY/ton - Long-term supply mixed coal accounts for about 20% of total sales, with metallurgical red mixed coal at about 30% [12] Future Outlook - **Coal Price Outlook**: Sales department feedback indicates multiple price increases in July and early August, with a cautiously optimistic outlook for future coal prices [8] - **Project Development**: No current construction projects; two planned projects totaling approximately 8 million tons are in the early stages [6] - **Dividend Policy**: Management aims to maintain stable dividend levels, though no specific commitments were made [7] Market Dynamics - **Impact of Steel Industry**: The steel industry significantly influences the demand for injection coal, which remains in short supply [19] - **Industry Trends**: Large-scale acquisitions, such as those by Shenhua Group, may influence the coal industry, with potential for asset injections and mergers in the future [19] Corporate Strategy - **Reorganization**: Following the 2020 reorganization, Lu'an Group is positioned as a dual-focused enterprise on chemicals and coal, with the listed company primarily focusing on coal [20]