Founder: Confidence recovery, stepping up, high dividends & coal-power cooperation still worth attention

Founder released a research report stating that the structural shortage of thermal coal is gradually easing in 2024, and coal prices are gradually stabilizing. The "dividend" has become a key word in the A-share market in 2024. Looking ahead to 2025, with strong supply and demand, coal prices are expected to remain high and stimulate energy demand through economic policies. The coal sector is expected to benefit from policy support during the economic cycle, as monetary policy shifts from "prudent" to "moderately loose," interest rates may remain low, and high dividend stocks are highlighted in a low interest rate market environment. High dividend stocks and coal-electricity joint ventures deserve attention under low interest rates. Founder's main points are as follows: Review of 2024 prices and market: Coal prices are gradually stabilizing, with "dividends" becoming the key word The structural shortage of thermal coal gradually eased in 2024, with strict safety inspections following frequent accidents in 2023 leading to reduced production. Imports of coal and hydroelectric power filled the production gap, while demands from the real estate sector dragged down demand for high-energy consuming electricity and non-electric coal, leading to a gradual stabilization of coal prices. Since 2021, the coal sector has undergone a relatively long period of prosperity and continued cyclical upturn, with the "dividend" becoming a key word in the A-share market in 2024 amidst weak macroeconomic growth. In the first half of 2024, the coal sector temporarily emerged from the bull market with high dividends, with the key being the recognized stability of coal enterprise profits. Due to a slowdown in opening new coal mines and less new capacity concentrated mainly in Xinjiang, the rigid demand for coal prices and expectations of stable coal enterprise profits have strengthened, coupled with high dividends of coal enterprises offering a certain investment return. Outlook: With strong supply and demand, coal prices are expected to remain high, and stimulating economic policies may boost energy demand Domestically, the impact of safety inspections is gradually weakening, leading to more stable production by coal enterprises, and coal production is expected to return to normal in 2025. In the long term, China has limited new capacity, mostly located in Xinjiang, and there are mines on the mainland facing depletion, indicating continued tight supply conditions. On the import side, overseas coal imports in 2024 are close to 500 million tons, with monthly import volumes remaining stable. Profit margins for imported coal are limited, and the likelihood of further increasing imports is small. On the demand side, stable economic policies are expected to increase capacity utilization of high-energy-consuming enterprises, and the capacity for wind and solar power integration also has limits, thus coal demand is expected to continue to rise. Three scenarios - pessimistic/neutral/optimistic - predict a shortfall in thermal coal demand-supply of approximately 24753/12138/1425 million tons, corresponding to a central coal price of 770/840/950 RMB per ton. For coking coal, with overseas steel demand remaining strong and expectations of a reversal in the downturn trend of the real estate market cycle, the supply and demand for coking coal is expected to improve, with shortfall predictions of 2718/-24/-2764 million tons in the pessimistic/neutral/optimistic scenarios respectively. In the long term, both China and global supplies of coking coal are gradually decreasing, leading to increasing scarcity. Investment strategy: Policy support benefits cyclical sectors, high dividend stocks and coal-electricity joint ventures deserve attention under low interest rates Cyclical sectors are expected to benefit from next year's economic policy stimulus. Focus on cyclical sector stocks. Leading coal enterprises: China Shenhua Energy(01088,601088.SH), China Coal Energy(01898,601898.SH), Shaanxi Coal Industry(601225.SH); Targets with a large proportion of market coal or prospects for marginal improvement: Yankuang Energy Group(01171,600188.SH), Jinneng Holding Shanxi Coal Industry(601001.SH), Shanxi Coal International Energy Group(600546.SH); Coking coal sectors with significant relevance to real estate and infrastructure: Shanxi Coking Coal Energy Group(000983.SZ), Pingdingshan Tianan Coal Mining(601666.SH), Huaibei Mining Holdings(600985.SH). With monetary policy transitioning from "prudent" to "moderately loose" and interest rates likely to remain low, high dividend stocks stand out in a low interest rate market environment. Coal companies generally offer high dividends, and with coal prices remaining high, the value of high dividend investments cannot be ignored. For coal-electricity joint companies, besides recovering profits and stabilizing returns against fluctuations, such partnerships can enhance business duration, reinforcing valuation logic, and companies with long business durations in coal-electricity partnerships are worth anticipating, suggesting monitoring: China Coal Xinji Energy(601918.SH), Shaanxi Coal Industry(601225.SH), China Shenhua Energy(601088.SH), China Coal Energy(601898.SH). Risk warning: Safety production risks, significant coal price fluctuations, macroeconomic fluctuations, risks of new capacity not meeting expectations.