Founder: The bottoming out of the coal industry is now in the past, embracing the industry's rising prosperity.

Founder released a research report stating that as the energy crisis continues to evolve, the demand for coal substitutes is increasing, the supply and demand pattern of coal is improving, and companies with strong coal price elasticity are expected to benefit first. In a situation of high oil and gas prices, companies focusing on investing in coal chemical industry may see an improvement in their chemical profits, which could enhance the company's performance. The coal-electricity integration model will effectively resist cyclic fluctuations and benefit from the price difference between market coal and long-term contract coal. Joint ventures can recover profits from long-term contracts and enhance profitability. Additionally, in the context of the "dual carbon" policy, coal-electricity joint venture companies can improve their operational duration and increase their valuation. Growth-oriented companies are worth paying attention to, as well as potassium salt and molybdenum ore increment. Founder's main points are as follows: The annual reports for the coal industry in 2025 and the first quarter of 2026 are being released successively. Due to the impact of falling coal prices, the performance of the coal sector has seen varying degrees of decline. In 2025, the total revenue of the coal industry was 1.152 trillion yuan, a year-on-year decrease of 15.2%; achieving a net profit attributable to the parent company of 106.1 billion yuan, a year-on-year decrease of 27.5%. In the first quarter of 2026, coal prices have slightly declined year-on-year, and the overall coal industry continues to be under pressure. In Q1 2026, the coal industry recorded operating income of 280 billion yuan, a year-on-year increase of 0.4%; achieved a net profit attributable to the parent company of 27 billion yuan, a year-on-year decrease of 5.7%. The report found that the performance of some companies has improved year on year, such as China Coal Xinji Energy, Shanxi Coal International Energy Group, Beijing Haohua Energy Resource, and Shanxi Coking Coal Energy Group. Review of 2025 and Q1 2026 At the beginning of 2025, coal prices continued to decline from the end of 2024, especially against the backdrop of a mild winter, high hydropower output, slowing safety supervision, and trade wars. Coal prices continued to decline, with some coal mines facing a situation of "quantity over price", causing stock prices to fall. In July, the Energy Bureau issued a notice regarding the verification of overcapacity production, and the phenomenon of "quantity over price" in coal production began to converge. At the same time, with the continued high summer temperatures, coal prices started to rise, reaching the highest point of the year as we entered the winter storage period for thermal coal, leading to a rise in stock prices. In the first quarter of 2026, as the rise in coal prices began to weaken, there was a temporary pullback in coal prices. However, with Indonesia limiting production, conflicts between the US and Iran, domestic production not demonstrating significant increases, and a noticeable improvement in demand, coal prices began to rise in March. Future Prospects Current oil and gas prices are still high, and domestic electricity demand is strong, while coal inventories are low. Once the summer replenishment of coal inventories begins, coal prices in 2026 will have strong upward momentum. For the coal sector, the report believes that the current coal sector has a strong investment price ratio, with the flexibility brought by geopolitical conflicts likely to increase. The trend of rising coal prices in 2026 is basically confirmed, and geopolitical conflicts may further drive prices up. In addition, based on the performance in 2025, companies such as China Shenhua Energy and China Coal Energy, which have a higher proportion of long-term contracts, have more stable performance. According to the first quarter report, China Coal Xinji Energy had a smaller decline, leading the report to believe that coal-electricity joint venture companies may be able to hedge their performance, and are likely to become an investment theme in the second half of 2026. Risk Warning: Risks of safety production, changes in the international situation, macroeconomic fluctuations, and significant fluctuations in commodity prices.