The Zhitong Finance App learned that Guotai Junan released a research report saying that under progressive policy expectations, seeking “certainty” is also an investment idea. Coal under a normalized allocation is more certain. Institutional holdings are already below the median value of the past 5 years, and the risk of continuing to decline is not significant, and the long-term capital allocation logic remains unchanged in the context of declining interest rate cycles at home and abroad; progressive policy implementation is expected, demand is less likely to be fulfilled after “new construction in spring” in March, and investment certainty may still be an investment idea; regardless of policy incentives in 2025, the certainty of coal fundamentals is likely to still be at the forefront of all industries.

Reviewing the coal market in 2024, steady industry supply and demand surpassed expectations, and resilient coal prices.

Guotai Junan believes that in 2024, against the backdrop of increasing downward pressure on downstream demand, the coal industry handed over the perfect answer. The bottom of the two off-season rounds of coal prices rose from the same period in 2023. The reason behind the exceeding expectations was a stable supply pattern under the “supply-side cycle” since 2016, compounded by the “Coal Mine Safety Regulations” implemented on April 1, continuing to tie a tight loop on existing production capacity; and the increase in electricity consumption in the whole society with certainty on the demand side is already one of the most definitive growth directions in the current macro context. Meanwhile, the decline in the coal sector's performance gradually narrowed, leading performance Q2 began to resume positive growth, and the increase in mid-term dividends all continued the coal sector's dividend investment mentality.

Looking ahead to 2025, “steady state” is still the key word in the industry, and coal prices are bottoming out without fear of marginal supply and demand weakening slightly.

Guotai Junan said that under the assumption of neutral policy expectations, the paper marginal supply and demand for coal is slightly weaker than in 2024: the core increase in supply comes from an increase in production in Shanxi (about 70 million tons year-on-year increase), but the impact of actual sales will be weaker than production data; on the demand side, demand for electric coal may still maintain a good growth of 2.5-3% in the context of weakening marginal contributions from hydropower and new energy sources. The demand for non-electric coal may continue to decline, but the decline is bottoming out, and the marginal drag on chemical industry remains weak. Good growth. Judging that the supply of coal in 2025 was about 1.2%, slightly larger than 0.9% in 2024, the coal price center may decline slightly. The bottom of the coal price of 800 yuan/ton is clear, and the certainty is still strong.

Investment advice:

The dividend investment idea is still the core of the sector. In 2025, the coal price center will remain stable, and the clarity and predictability of the profits of leading companies will continue to increase. The core dividends will continue to be recommended, China Shenhua (601088.SH), Shaanxi Coal (601225.SH), and China Coal Energy (601898.SH); the coking coal sector is the core in the context of steady integrated coal and power management; the coking coal sector is the core. In the context of future increases on the policy side, the coking coal sector is recommended. 601918.SH 600985.SH 601666.SH Hengyuan Coal & Electricity (600971.SH), Shanxi Coking Coal (000983.SZ); recommend Yankuang Energy (600188.SH), Shanmei International (600546.SH), and Huayang Co., Ltd. (), which are expected to show resilient performance in the context of increased policies in 2025. 600348.SH

Risk warning: Downstream demand fell short of expectations, steel prices fell sharply, and imports exceeded expectations.