Morgan Stanley has issued a research report stating that YANKUANG ENERGY (ASX: 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 grew 73% year-on-year and 24% quarter-on-quarter to RMB 3.95 billion, compared with market forecasts of RMB 3.8 billion to RMB 4 billion. The bank maintains its Overweight rating with a target price of HK$15.9.
The bank noted that the year-on-year earnings improvement reflects higher prices for coal and coal 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.
The bank expects Yankuang Energy Group Company Limited (ASX: 600188) to see resilient earnings in the fourth quarter of 2026. Thermal coal prices have recently found support due to slow output 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 could 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 be even better.
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