According to the Zhitong Financial APP, the coal sector suffered the largest decline. As of publication, Yanzhou Coal Energy (01171) fell by 6.67% to HKD 10.36; China Coal Energy (01898) fell by 6.02% to HKD 8.28; China Shenhua Energy (01088) fell by 5.64% to HKD 34.3; and Shougang Res (00639) fell by 4.05% to HKD 3.08.
In terms of news, China Shenhua recently released an earnings forecast, expecting to achieve a 28.6-30.6 billion yuan net profit attributable to shareholders in the first half of the year, a YoY decrease of 8.1%-14.1%. The decrease in net income is mainly due to the decrease in coal sales prices and the average utilization hours of coal-fired units. According to Coal Resource Network, the average price of Qinhuangdao Q5500 thermal coal from January to June 2024 was 874.88 yuan per ton, a YoY decrease of 14.29%. Coal mines in the main producing areas of Jin-Shan-Meng showed a more significant decline, with an average price drop of 20%-30% YoY in the first half of the year.
Guotou Securities pointed out that in the first half of 2024, under the dual pressure of weak demand and the squeeze of hydropower and new energy output on the space of thermal power, as well as the multiple factors of high inventories at ports and terminal storage that are difficult to resolve, although the supply-side has clearly shrunk, the overall volatility of domestic thermal coal prices is relatively stable. Citic Securities stated that the average YoY decline in Q2 net income of the sample companies tracked is about 12%, and the QoQ decline is about 7%. The pricing in the sector has reflected the downward trend in the early stage, and the significant narrowing of the YoY decline in Q2 is conducive to the expected recovery.