Open-source securities: Antidote to infighting expected to lift coal prices, core value of coal to be reshaped.

Guosen Securities released a research report stating that with the policy-driven production contraction on the supply side, as well as the expectation of a rebound in non-electric coal demand during the peak season of "Golden September and Silver October", the supply and demand fundamentals of coal are expected to continue to improve, and prices of both types of coal are expected to have upward elasticity. In the highly uncertain global political and economic environment and expectations of stable domestic economy, there is emotional impulse in investment behavior in the capital market. The coal sector has both cyclical and dividend attributes. Currently, coal holdings are at a low level, with the fundamentals reaching the inflection point and it is time to position the layout. The main views of Guosen Securities are as follows: Thermal coal is a policy coal, and the agency judges that prices will rebound to the long-term contract price. Recently, prices have rebounded above the target price, which is around 700 yuan, the actual transaction price of local state-owned enterprises. The spot price has recovered to the annual long-term contract price, which is the result of the operation of the dual-track system of bulk commodities, where the long-term contract acts as a preferential variety and forms an inversion with the spot price, leading downstream users to prioritize buying spot coal which delays the purchase of long-term contracts, thereby driving up the spot prices. It is still optimistic about the spot price of thermal coal reaching the third target price, that is, reaching the break-even point for "coal and thermal power enterprises" (estimated to be around 750 yuan in 2025), and it is predicted that the peak value for this round of coal price increase is around 860 yuan, which can be considered as the fourth target price. The recent price adjustment is due to the weakening coal consumption caused by the transition from summer to autumn, but in the future, non-electric coal consumption during the peak season of "Golden September and Silver October" is expected to take over and push prices up again, especially for coal used in the chemical industry. Coking coal is a market-driven coal, and the price is more determined by the supply and demand fundamentals. The target price can be determined by the ratio of coking coal price to thermal coal price. The spot ratio between coking coal at Jingtan Port and thermal coal at Qingdao Port is about 2.4 times, and the corresponding target prices of coking coal for the first, second, third, and fourth targets of thermal coal are 1608 yuan, 1680 yuan, 1800 yuan, and 2064 yuan respectively. The coking coal futures market will recover the discount with the spot price at Jingtan Port. One of the dual logics of coal stocks: cyclical elasticity. The current prices of thermal coal and coking coal are still at historical lows, providing room for rebound. With the policy-driven production contraction on the supply side and the expectation of a rebound in non-electric coal demand during the peak season of "Golden September and Silver October", the supply and demand fundamentals of coal are expected to continue to improve, and prices of both types of coal have upward elasticity. Thermal coal is supported by the mechanism of long-term contracts and the logic of "coal and thermal power enterprises sharing profits equally", while coking coal, due to its higher degree of marketization, is more sensitive to changes in supply and demand and may show greater price elasticity. The second dual logic of coal stocks: stable dividends. From the mid-year report data, despite the overall pressure on profits in 2025, most coal companies still maintain a high dividend yield; although industry profits have decreased significantly year-on-year, it has not shaken the determination of coal companies to pay dividends, as six listed coal companies have announced mid-term dividend plans (China Shenhua Energy, Shanxi Coking Coal Energy Group, Shaanxi Coal Industry, Shanghai Datun Energy Resources, Yankuang Energy Group, China Coal Energy), with a total dividend amount of 24.13 billion yuan, basically continuing the trend of dividend payments by seven companies in 2024, the willingness of companies to pay dividends and the frequency of dividends have shown a significant increase. As a key player in the state-owned sector, the leading company China Shenhua Energy has a dividend ratio of up to 79% in the first half of the year, with a significant demonstration effect. In the highly uncertain global political and economic environment and expectations of a stable domestic economy, there is emotional impulse in investment behavior in the capital market. The coal sector has both cyclical and dividend attributes. Currently, coal holdings are at a low level, with the fundamentals reaching the inflection point, and it is time to position the layout. Four main lines of selected coal stocks will benefit: - Line one, cyclical logic: Thermal coal stocks: Jinneng Holding Shanxi Coal Industry, Yankuang Energy Group; Metallurgical coal stocks: Pingdingshan Tianan Coal Mining Co., Ltd., Huaibei Mining Holdings, Shanxi Lu'an Environmental Energy Development Co., Ltd. - Line two, dividend logic: China Shenhua Energy, China Coal Energy (dividend potential), Shaanxi Coal Industry. - Line three, diversified aluminum elasticity: Henan Shenhuo Coal & Power, Inner Mongolia Dian Tou Energy Corporation. - Line four, growth logic: China Coal Xinji Energy, Guanghui Energy. Risk warning: Risk of economic slowdown, risk of supply-demand mismatch, risk of accelerated substitution by renewable energy.