According to a research report from Morgan Stanley, YANKUANG ENERGY (01171) is expected to post a 56% year-on-year increase in net profit for the first nine months of 2026, reaching RMB 11.1 billion, which is in line with market expectations.
This implies third-quarter earnings rose 73% year-on-year and 24% quarter-on-quarter, reaching RMB 3.95 billion, compared to market expectations of RMB 3.8 billion to RMB 4.0 billion. The bank maintains its "Overweight" rating with a target price of HKD 15.9.
The bank noted that the year-on-year profit improvement reflects rising prices for coal and coal-based chemical products during the first nine months, as well as higher investment income from the sale of its entire equity stake in Inner Mongolia Xintai Coal Industry.
Morgan Stanley expects YANKUANG ENERGY's earnings to remain resilient in the fourth quarter of 2026: thermal coal prices have recently received support due to slow production growth in major coal-producing provinces, low coal inventory levels at inland power plants, and restocking demand ahead of the winter heating season.
Similarly, coking coal prices may also benefit from constrained supply in major coal-producing provinces such as Shanxi due to enhanced safety inspections, as well as reduced imports from Mongolia.
As coal prices improve, coal chemical profits and the earnings performance of the newly acquired renewable energy business are expected to perform better.
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