Smart Finance News App learned that Sealand Securities published a research report stating that in the process of energy transformation, it is necessary to ensure the smooth operation of the energy system. Safe, stable and low-cost coal-fired power generation is undoubtedly a better choice. In the medium and long term, the dominant position of thermal power generation in the power generation field will not change, and its position will be further strengthened under extreme circumstances. However, the procedures for mining coal are complex, the construction and production cycles are long, and the cost of building new mines has increased significantly. The willingness of mainstream coal companies to build new mines is still weak. The industry has basically reached its capacity constraint state, and the ability to constrain supply in the industry has not changed. It is expected that in the next few years, the coal industry will still maintain a tight balance, with high-quality coal industry assets and abundant cash flow on the books. Coal-listed companies have the five characteristics of "high profitability, high cash flow, high barriers, high dividends, and high safety margins", and it is suggested to downplay short-term fluctuations in coal prices and grasp the value of the coal sector.

In the second quarter of 2024, the market value of coal industry stocks held by actively managed funds increased to 1.61%, an increase of 0.14 percentage points compared to the previous quarter, based on the statistical caliber of the Shenwan First-class Coal Industry and including typical stock, equity-oriented mixed and flexible allocation funds. China Shenhua Energy, Shaanxi Coal Industry, Inner Mongolia Power and Energy, China Shenhua Energy HK and Yankuang Energy are the top 5 funds in terms of the number of shares held. In terms of changes in quarterly positions, the companies most added by funds are Gansu Energy Chemical, Shanxi Coking Coal, China Coal Energy HK, Jinneng Holding Shanxi Coal Industry, and China Coal Energy; the companies most reduced by funds are Yankuang Energy HK, Shaanxi Coal Industry, Yankuang Energy, China Coal Xinji Energy, and Pingdingshan Tianan Coal Mining.

In terms of coal types, for thermal coal, the companies most added this quarter are Gansu Energy Chemical, China Coal Energy HK, Jinneng Holding Shanxi Coal Industry, China Coal Energy, Beijing Haohua Energy Resource, China Shenhua Energy, Inner Mongolia Power and Energy, and Zhengzhou Coal Industry & Electric Power; the most reduced companies are Anhui Hengyuan Coal Industry and Electricity Power, China Shenhua Energy HK, Shanxi Coal International Energy Group, China Coal Xinji Energy, Yankuang Energy, Shaanxi Coal Industry, and Yankuang Energy HK. For coking coal and coke, the companies most added this quarter are Shanxi Coking Coal Energy Group, Huaibei Mining Holdings, Shanxi Lu'an Environmental Energy Development Co., Ltd., Yunnan Coal & Energy, Shanxi Coking, Shanghai Datun Energy Resources and Baotailong New Materials; the most reduced companies are Kailuan Energy Chemical, Guizhou Panjiang Refined Coal, Jizhong Energy Resources, Wintime Energy, and Pingdingshan Tianan Coal Mining. For clean coal, the company most added this quarter is Shanxi Huayang Group New Energy; the most reduced company is Shanxi Lanhua Sci-tech Venture.

In the process of energy transformation, safe and stable and cost-effective coal-fired power generation is undoubtedly a better choice for ensuring the smooth operation of the energy system. In the medium and long term, the dominant position of thermal power generation in the field of power generation will not change. In extreme cases, its position will be further strengthened. During the "14th Five-Year Plan" period, the year-on-year increase in new thermal power units has increased significantly, and thermal power production still shows a trend of continuous growth. At the same time, oil prices remain at a high level, and the construction and production of coal chemical projects have become more active. The demand for coal may continue to increase in the future. However, the procedure of mining coal mines is complicated, the construction and production cycle is long, and the cost of building new mines has risen sharply. The willingness of mainstream coal companies to build new mines is still weak. The industry has basically reached a state of high load with its current production capacity. After experiencing a capacity increase in the past two years, the space for further capacity increase has been greatly reduced. Coupled with the continuous withdrawal of depleted mines in eastern and other regions, the industry's ability to supply is still restricted. Sealand Securities predicts that the coal industry will remain in a tight balance for the next few years. The coal industry has high asset quality and abundant cash flow on its balance sheet. Listed coal companies show the five characteristics of "high profits, high cash flow, high barriers to entry, high dividends, and high safety margins." It is recommended to downplay short-term coal price fluctuations, grasp the value attributes of the coal industry sector, and maintain a "recommended" rating for the industry.

For the current situation, it is recommended to focus on metallurgical coal: Huaibei Mining (a regional coking coal leader with low valuation and potential for growth in coal coking); Pingdingshan Tianan Coal Mining (a high-dividend coking coal leader in central and southern regions, with convertible bonds issued); Shanxi Lu'an Environmental Energy Development Co., Ltd. (market coal accounts for a high proportion, with great performance elasticity); Shanxi Coking Coal (a leader in coking coal industry, a target for Shanxi state-owned enterprise reform); For thermal coal stock recommendations: China Shenhua Energy (with a high proportion of long-term coal contracts, stable performance and high dividends); Shaanxi Coal Industry (with excellent resource endowment, stable performance and high dividends); China Coal Energy (a low-value target with a high proportion of long-term contracts); Yankuang Energy (a high-dividend target with large overseas coal mine assets and strong elasticity); Jinneng Holding Shanxi Coal Industry (with a large amount of net monetary assets on the balance sheet, there is room for improvement in performance); China Coal Xinji Energy (the degree of coal-electricity integration continues to deepen, with stable profits and high investment value); Shanxi Coal International Energy Group (low-cost coal mines, strong profitability and high dividends); Guanghui Energy (driven by both coal and natural gas, with smooth expansion logic). For coal + electrolytic aluminum, it is recommended to focus on Henan Shenhuo Coal & Power (integrated coal-electricity, with flexible potential for electrolytic aluminum). For clean coal, it is recommended to focus on Shanxi Lanhua Sci-Tech Venture (layout of sodium-ion batteries, resonance of old and new energies); Shanxi Lanhua Sci-Tech Venture (excellent resource endowment, high-quality clean coal target).

Risk warning: 1) risk of economic growth rate falling short of expectations; 2) risk of policy regulation being greater than expected; 3) risk of continuous substitution of renewable energy; 4) risk of coal imports' impact; 5) risk of companies' performance falling short of expectations; 6) risk of calculation error.