Hong Kong stock concept tracking | Oil and gas prices surge, focus on opportunities in the coal industry chain under energy substitution (with concept stocks)

In recent times, the situation in the Middle East is turbulent, and oil and gas prices have risen significantly, highlighting the substitutability of coal. In March, the international price of thermal coal soared by 24.55%, the highest monthly increase in nearly 4 years. Recently, South Korea, Thailand, and Indonesia have implemented measures to increase coal usage and production. In South Korea, the government has decided to strictly implement a car restriction measure based on license plate numbers for public vehicles, and has called for private sector participation. At the same time, the South Korean government has announced the lifting of the restriction on coal-fired power generation to 80% of installed capacity. Furthermore, to alleviate short-term energy supply pressures, countries like Thailand and Vietnam are increasing the development of domestic coal-fired power generation to reduce dependence on imported energy. Indonesia is the world's largest exporter of thermal coal, accounting for about half of the global export volume. The Indonesian government has recently decided to revise the annual coal production quota for 2026, planning to increase coal production and considering using the produced coal primarily for domestic use rather than for export. The Indonesian government has also stated that it is reviewing coal export taxes, with a plan to raise tax rates in response to the increase in international coal prices. Goldman Sachs predicts that if oil supply disruptions continue, oil prices could exceed the historical high of $147 per barrel. Many countries are shifting from natural gas to coal for power generation, increasing global demand for coal substitutes. Additionally, with rising global shipping costs, major coal-exporting country Indonesia is considering re-imposing "export taxes", increasing the cost of imported coal, causing many power plants to shift to domestic coal. Overall, the increase in oil and gas prices has translated to coal through coal chemical and power generation pathways. Galaxy Securities believes that oil prices remain a key variable influencing the market in the near term, strengthening the trading logic for the energy substitution sector. Looking at the demand side, this year may experience a hot summer. According to meteorological reports, after the Qingming Festival, the southern regions will see a significant rise in temperatures, with many areas in southern China experiencing temperatures above 30C, and some areas in Hainan even reaching around 40C, making it very hot. The peak of summer will lead to an increase in coal and electricity demand. Additionally, the high growth in AI computing power consumes a significant amount of electricity. The inclusion of "algorithm-electricity synergy" in the government work report provides steady support for China's electricity demand, further highlighting the status of coal as an "energy ballast". Zhongtai believes that looking towards the middle to late April, the ongoing release of coal substitution demand, coupled with the approaching peak summer coal stocking cycle, is expected to steadily increase coal demand. Meanwhile, the Daqin Railway has started a 30-day spring maintenance construction, 5 days longer than the original plan, and the pace of inventory accumulation is expected to slow down. Taking everything into consideration, domestic coal prices are expected to maintain a strong upward trend. GF SEC points out that the supply and demand of coal in 2026 will transition from loose to tight, and coal prices have exceeded expectations since the beginning of the year. In the short term, global energy prices and coal demand are further boosted by the situation in the Middle East, leading to increased import coal costs, providing profit and valuation elasticity for coal. In the medium to long term, domestic production growth may significantly decrease compared to the previous period, while expectations for exports and production in countries like Indonesia are falling. Against the backdrop of high energy prices, coal-fired power and coal chemical demand have resilience, and coal is expected to maintain a high level of prosperity. Additionally, the coal industry's price-to-book ratio is 1.71 times, the price-to-earnings ratio is 18.6 times, and some leading companies have a dividend yield of around 4%, which, considering the profit elasticity from price increases, gives an advantage in valuation and dividends. In the near term, domestic demand for thermal power and cement is turning positive, with supply steadily decreasing, leading to an expected tight balance in supply and demand for the whole year; internationally, global coal trade volume is decreasing compared to the previous year, with exports from countries like Indonesia and Australia also decreasing. Related concept stocks: China Shenhua Energy (01088): In late March, Morgan Stanley published a research report stating that China Shenhua Energy (01088) has been added to the focus list for Mainland China/Hong Kong, with a rating of "Buy". China Shenhua Energy is the largest coal producer in China, with coal production reaching 330 million tons and sales reaching 430 million tons by 2025. Despite the continuous increase in domestic coal supply, the stock has been re-evaluated in recent years due to China's energy transition. As coal prices rise annually, Shenhua's coal sector will contribute higher profits. Additionally, despite the rise in share price, Shenhua currently has a dividend yield of about 7%, remaining attractive in volatile market conditions. Yankuang Energy Group (01171): Yankuang Energy Group is a leading coal company in North China, with coal bases in Shandong, Shaanxi, Inner Mongolia, and Australia, making it the only coal company in China with a large volume of overseas resources. China Coal Energy (01898): During the results briefing, China Coal Energy stated that in 2025, the net profit attributable to shareholders of the listed company reached 17.9 billion yuan, basic earnings per share were 1.35 yuan, net cash inflow from operating activities was 29.8 billion yuan, and the asset-liability ratio was 45.8%. The company produced 135 million tons of coal and sold 256 million tons; its major coal chemical products had a production volume of 6.061 million tons and sales volume of 6.356 million tons; coal mine equipment output value was 9.21 billion yuan; financial business assets were in the hundred billion level, with significant added value. The company has implemented cost management standards, resulting in a 10.7% decrease in selling costs per unit of self-produced coal. The company is actively promoting "two-way cooperation", with key projects such as the Libi Coal Mine, Wushenqi Power Plant, Yulin Coal Deep Processing Base, and "Liquid Sunshine" steadily progressing, enhancing the momentum for transformation and development. Yancoal Australia (03668): At the end of February, China International Capital Corporation (CICC) released a research report stating that Yancoal Australia's (03668) net profit in 2025 fell by 64% to 440 million Australian dollars, which was below market expectations by 15% but exceeded the bank's expectations by 20%, mainly due to the high sensitivity of profits to unit profit assumptions. The bank raised its target price for the company from HK$31 to HK$38, maintaining a "Buy" rating. Yancoal Australia announced a final dividend of 0.122 Australian dollars per share, plus an interim dividend of 0.062 Australian dollars per share, resulting in a full-year dividend payout ratio of 55%, in line with Yancoal's dividend policy. Looking ahead to 2026, the bank predicts a 3% growth in Yancoal's equity sales volume, but due to sustained inflation in raw material costs, the bank forecasts an increase in unit cash costs of approximately 1%. Considering the signs of stability in coal prices since the beginning of the year, the bank has raised its coal price forecasts for 2026 and 2027 by 8% and 7% respectively, and its profit forecasts for those years by 26% and 10% respectively.