HK Stock Market Move | China Shenhua Energy (01088) rises over 3%; first three quarters' net profit broadly in line with market expectations; institutions say winter stockpiling is expected to support an upward shift in the central coal price range.

China Shenhua Energy (01088) rose over 3%, up 2.33% as of press time at HK$42.18, with turnover of HK$177 million. On the news front, China Shenhua Energy recently disclosed its third-quarter results. China Great Wall noted that China Shenhua Energy's 26Q3 operating revenue was RMB106.69 billion, down 10.3% quarter-on-quarter; net profit attributable to parent was RMB15.69 billion, down 13.1% quarter-on-quarter. The bank judged that the decline in production and sales of self-produced coal offset the contribution of rising coal prices, which may be related to stricter safety supervision in the third quarter after mine accidents; 26Q3 investment income was RMB664 million, down 46.5% quarter-on-quarter, with reduced profits from power plants jointly invested with GD Power Development dragging on profit. Looking ahead to 26Q4, the bank believes supply guarantee efforts are expected to drive a recovery in coal production and sales, and together with winter stockpiling expected to support an upward shift in the central coal price range, quarterly net profit attributable to parent is expected to rebound. Morgan Stanley released a research report stating that China Shenhua Energy's net profit for the first nine months of this year rose 4% year-on-year to RMB44 billion, implying third-quarter net profit rose 3% year-on-year to RMB15.7 billion, broadly in line with market expectations. The bank expects the company's fourth-quarter earnings to remain resilient. Resumption of production at Shanxi coal mines is still progressing, but overall progress is slow due to continued strict safety inspections and a shift in the mindset of coal mining enterprises. In addition, pre-winter heating restocking demand and low power plant inventories are expected to keep thermal coal prices fluctuating at high levels in the near term, implying China Shenhua Energy's earnings will be resilient through year-end.