Hong Kong stocks concept tracking | Cold winter strikes with policy suppression of overproduction Good outlook for further increase in coal prices (with concept stocks)

According to Tianfeng Energy, coal port inventory in China has dropped to a three-year low, leading to rising prices at the pit mouth. Last week, the price of 5500 kcal coal at Qinhuangdao Port remained stable at 770 yuan/ton, while prices at production sites saw varying degrees of decline last week. However, as the weekend approached, there were signs of rising prices again with individual pits raising prices, and Shenhua increasing their purchase prices. With the coal sector reversing its trend of internal competition, and the upcoming winter demand, several institutions have expressed that coal companies' performance is expected to further improve. In recent weeks, many northern regions have experienced a "cliff-like" drop in temperature, with places like Mohe in Heilongjiang seeing temperatures drop to -25C on the morning of October 25, setting a historical low for late October in the area. Parts of Hulunbuir in Inner Mongolia have dropped below -30C, experiencing extreme cold for the same period in nearly a decade. With the onslaught of the cold wave, places like Zhangjiakou and Daqing have already started heating earlier, officially kicking off the peak season for coal consumption. On the demand side, as the peak season for coal consumption approaches, the demand from steel mills and thermal power plants remains high, driving coal prices up. The continued implementation of the "anti-internal competition" policy, combined with the upcoming safety production inspections, is expected to lead to safety improvements in coal production and strengthen expectations of a tightening supply, thus stabilizing and increasing coal prices. Zhongtai has released a research report stating that with the start of the heating season and the strengthening of safety supervision, coal prices are expected to maintain a volatile upward trend. The anticipation of constraints on the supply side due to the "anti-internal competition" expectations and the release of demand due to the "peak-winter" expectations are causing coal prices to have a steady upward trend. The bank forecasts that coal prices in November are expected to maintain the volatile upward trend, mainly due to the start of the heating season and a comprehensive central safety production inspection. In terms of inventory, sample power plant inventories decreased by -2.22 million tons year-on-year (down from -2.13 million tons last week), which is at a normal level for the same period; while port inventories decreased by -2.45 million tons year-on-year (down from -1.02 million tons last week), which is at a relatively low level for the same period. Imports are expected to remain low from October to December. Data from Ms shows that the shipping volume in the first four weeks of October was 20.34 million tons, down by 10.8% compared to September and down by 40.1% year-on-year. With safety checks approaching in November, production sites are experiencing maintenance shutdowns, leading to a stabilization and rebound in pit prices. The effects of the excess production check on production are accumulating. China Shenhua Energy's commodity coal production in the third quarter was 86 million tons, an increase of 2.3% year-on-year and 3.1% quarter-on-quarter; commodity coal sales volume was 112 million tons, a decrease of 3.5% year-on-year and an increase of 5.7% quarter-on-quarter, with self-produced coal sales volume reaching 87 million tons, an increase of 2.7% year-on-year. Yankuang Energy Group also showed stable performance, with continuous growth in commodity coal production. In the third quarter of 2025, Yankuang Energy Group's commodity coal production was 460.3 million tons, an increase of 4.92% year-on-year; the cumulative production output in the first three quarters of this year was 1.359 billion tons, an increase of 6.90% year-on-year. In the third quarter, YANCOAL AUS's commodity coal production (equity share) was 93 million tons, a decrease of 9%; commodity coal sales volume (equity share) was 107 million tons, an increase of 3%. In terms of performance, the coal sector's performance in the third quarter showed a clear improvement. The coal sector achieved revenues of 297.9 billion yuan in Q3, a decrease of 16.5% year-on-year and an increase of 1.5% quarter-on-quarter; net profit attributable to shareholders was 27.6 billion yuan, a decrease of 30.3% year-on-year due to the high base in the same period last year, but a significant improvement quarter-on-quarter, with a 14.1% increase compared to the second quarter. Changjiang analysis indicates that the coal sector saw the largest increase in October, mainly driven by the resonance of fundamentals, policies, and valuation. Fundamentally, the rise in thermal coal prices is sharp. Price fluctuations mainly stem from the demand and supply sides. On the demand side, the unexpected drop in temperature in the north and the gradual cooling in the south have led to increased daily consumption by power plants, with available inventory days lower than in previous years and a greater need for replenishment; on the supply side, strict safety supervision and the inhibition of excess production from the "anti-internal competition" policy have limited supply release. Furthermore, from a valuation perspective, although some industry leaders have relatively high PEs, their dividend yields can still reach around 5%, meeting the requirements of insurance capital liability costs, and in comparison to the overall market, they offer a certain cost-effective advantage in terms of dividend yields. Related Stock Concepts China Shenhua Energy (01088): The company has abundant coal mining resources concentrated in China, with reserves and recoverable reserves ranking among the top in the country. As of 2024, the company's total coal resources amounted to 34.4 billion tons, with recoverable reserves of 15.1 billion tons. In 2024, the company's coal production reached 327 million tons, with sales of self-produced coal reaching 330 million tons, ranking first in the industry, and the coal mining reserve life reaching a long 41 years. Additionally, the company has completed the acquisition of Hangjin Energy, with the Dayan Mining acquisition project in progress, actively promoting exploration and development of new mines, and expecting to further expand production capacity in the future. China Coal Energy (01898): The company has abundant coal resources, ranking third among listed coal enterprises in terms of coal reserves, and second in terms of recoverable coal reserves, with 94.8% of recoverable reserves concentrated in the core regions of the Shanxi, Shaanxi, and Inner Mongolia coal production areas. Additionally, the company holds a leading market share in the industry, with approved production capacity in producing coal mines reaching 165 million tons and equity production capacity reaching 144 million tons. From 2018 to 2024, the company's coal production and sales volume increased from less than 80 million tons to nearly 140 million tons, with Li Bi and Weizi Gou mines adding up to a combined capacity of 6.4 million tons under construction, expected to start trial operation by the end of 2025. Yankuang Energy Group (01171): In 2025, the company plans to produce 155-160 million tons of commercial coal, and 8.6-9 million tons of chemical products; with a 3% decrease in coal sales costs per ton; the asset-liability ratio is expected to decrease to below 60%. Capital expenditure is planned at 19.545 billion yuan. The company's Wanfu coal mine started a joint trial operation at the end of 2024, with the Wucailawan No. 4 coal mine planned to start production in 2025, and Liusan Gedan and Galutu mines have obtained geological report approvals, with preliminary designs completed for Huolinhe No. 1 coal mine, these projects are expected to bring nearly 50 million tons of production capacity increment for the company.