Coal stocks experienced a collective uptick. At the time of writing, CHINA COAL (01898) rose 4.94% to HK$10.41; YANKUANG ENERGY (01171) gained 2.87% to HK$10.03; and CHINA SHENHUA (01088) increased 2.88% to HK$40.02.
The movement follows a sustained unilateral decline in port thermal coal prices since late November, which dropped from a high of 834 yuan/ton to a low of 670 yuan/ton, before finally rebounding on December 31 with a single-day increase of 8 yuan/ton to 678 yuan/ton.
Changjiang Securities attributes the core drivers of this rebound to a combination of year-end supply contraction and marginal improvements in demand, further reinforced by strengthened expectations of policy support.
While high inventory levels, the gradual resumption of coal mine production after the New Year's Day holiday, and cautious purchasing attitudes from end-users may still collectively constrain the magnitude of the coal price rebound, the fact that a price floor has been established is now evident.
Coupled with the expectation that insurance capital may increase its allocation to the coal sector around the turn of the year, the current moment is seen as opportune to continue emphasizing the allocation opportunities presented by coal dividends.
GF Securities released a research note stating that the average coal price center during the "14th Five-Year Plan" period has shifted significantly higher, and the coal industry is expected to usher in a new cycle during the "15th Five-Year Plan" period, highlighting its value.
Overall, industry sentiment is improving and is expected to remain stable with a positive trend during the "15th Five-Year Plan" period.
The institution believes the average coal price center for 2026 could rise to around 750 yuan/ton, with leading companies offering dividend yields mostly in the 4-6% range, demonstrating clear advantages.
Particularly after the reversal of pessimistic expectations regarding coal prices, valuation elasticity is expected to become apparent.
