Open Source Securities: Dual logic of cycle and dividend Four main lines layout coal sector.

Open source securities released a research report stating that the current prices of thermal coal and coking coal are still at historical lows, providing room for a rebound. With the supply side's "supervision of overproduction" policy pushing production contraction, and the demand side entering the heating season, the coal supply and demand fundamentals are expected to continue to improve, with both types of coal prices having upward elasticity. Among them, thermal coal has the support of the long-term agreement mechanism and the logic of "equal profit sharing between coal and thermal power enterprises"; while coking coal, due to its higher degree of marketization and sensitivity to supply and demand changes, may show greater price elasticity. Most coal companies still maintain a willingness to distribute high dividends. The coal sector has the dual attributes of cycle and dividend, with coal holdings currently at a low level, and the fundamentals have reached the turning point on the right, making it the time to lay out. Selecting coal stocks under four main themes will benefit: Theme one, cycle logic; Theme two, dividend logic; Theme three, diversified aluminum elasticity; Theme four, growth logic. The main views of Open Source Securities are as follows: Thermal coal new long-term agreement remains unchanged, maintaining stable pricing logic In terms of thermal coal: the price of thermal coal has risen. As of November 21, the closing price of Qin Port Q5500 thermal coal is 834 yuan per ton, unchanged from the previous period. The Guangzhou Port price index has reached 890 yuan, completing the coal-electricity profit-sharing target of 750 yuan suggested by the bank. It is currently undergoing the process of crossing above, and is also in the bank's predicted fourth target price range of 800-860. In the past two weeks, thermal coal prices have continued to rise, mainly due to the dual impact of supply contraction and a counter-trend surge in demand. The supply contraction is due to continued actions to crack down on overproduction after the National Day, while the surge in demand is due to the northern cold wave leading to an increase in heating demand and faster replenishment at ports. In terms of coking coal: As of November 21, the main coking coal price at Jingtang Port was 1780 yuan per ton, rebounding from the bottom of 1230 yuan in early July. The rebound in coking coal futures is more significant, rising from 719 yuan in early June to the current 1103 yuan, accumulating a 53.4% increase. The price of coking coal fluctuates with the price of thermal coal, showing a very clear pattern at a 2.4 times ratio. From a fundamental perspective, the reduction in production and imports of Mongolian coking coal has also driven up domestic coking coal prices. On November 17, 2025, the National Development and Reform Commission released the "Notice on Doing a Good Job in the Signing and Monitoring of Medium and Long-Term Contracts for Electricity Coal Supply in 2026." The 2026 long-term electricity coal contracts, positioned under "ensuring supply," remain overall unchanged in terms of quantity requirements (80% for power plants and 75% for coal companies), with more flexible contract performance (quarterly/annual "principally not less than 90%"), and introducing a monthly adjustment mechanism and "benchmark price + floating price" on the pricing end, with the long-term benchmark price at ports remaining unchanged at 675 yuan per ton. Mining acts in Shanxi, Shaanxi, western Mongolia, and eastern Mongolia can adopt a "benchmark price (local reasonable range median) + floating price (median price of ports/CECI production areas/government coal direct/CCTD production areas composite)" and be adjusted monthly, enhancing market linkage and improving performance stability. Investment logic: Thermal coal and coking coal prices are at the turning point on the right Thermal coal is a policy coal type, and the bank judges that the price increase will go through four processes: "restoring central enterprise long-term agreements, restoring local long-term agreements, reaching the coal-electricity profit-sharing line, and crossing and approaching the balance line of power plants' profit and loss statements." The restoration of spot prices to above long-term agreement prices (central enterprise long-term agreement of 670 yuan and local long-term agreement of 700 yuan) is actually a required result under the operation mechanism of a dual-track system for bulk commodities, as the long-term agreement itself is a preferential variety that is inverted with spot prices, driving downstream users to prioritize purchasing spot prices over long-term agreements, thereby driving the restoration of spot prices. Reaching the profit-sharing position of "coal and thermal power enterprises" (estimated around 750 yuan in 2025) is the ideal result of the policy to restore coal prices. The process of crossing above the ideal target is an inertia result because policy shifts are not as precise as a surgical knife, so there will inevitably be such a process. For thermal coal, predicting whether the crossing of coal prices will reach a top extreme value, the forecast is the balance line for power plants' profit and loss statements at 860 yuan, with a range of 800-860 yuan. Coking coal is a market-oriented coal type, and the bank judges that prices are more determined by the supply and demand fundamentals. Regarding its target price, the "ratio of coking coal prices to thermal coal prices" can be used for reference, with the current spot ratio of main coking coal at Jingtang Port to thermal coal at Qin Port being 2.4 times, 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. Coking coal futures will repair the discount with the main coking coal spot price at Jingtang Port. Risk warning: Risks of economic slowdown, significant increase in imported coal, and accelerated substitution of renewable energy.