Institutions: The coal sector still belongs to high-performance, high-cash, high-dividend assets.

CITIC Securities believes that the coal price and the rebound in earnings effects may gradually become evident, and it is optimistic about the sector’s outlook for the second quarter. Expectations of conflicts in the Middle East repeatedly disrupt conditions, and volatility in domestic and international energy prices has increased, but the overall trend is upward. If conflicts in that region continue afterward, coal prices are expected to rise beyond expectations; even if conflicts ease, it still takes time for the Strait of Hormuz to resume passage and for energy production in the Middle East to recover to pre-conflict levels. Therefore, the current situation is overall favorable for improving domestic coal price expectations in the second quarter. After the sector has gone through adjustments, if new catalysts emerge for coal price expectations, the market may continue to move higher. At the same time, based on expectations for coal prices and the corresponding prices of related chemical products, the price-increase effect since the onset of the conflict can be reflected more fully in the second quarter, benefiting the sector’s expansion of the seasonal peak into the second quarter.

Zhejiang Securities believes that in the first quarter, spot prices of coking coal increased year over year, while prices under long-term contracts fell year over year; output increased year over year, and it expects earnings to be roughly flat year over year. Prices of thermal coal and anthracite fell year over year; with volume up and price down, it expects earnings to decline slightly year over year. Looking ahead to the second quarter, oil prices remain high, overseas coal prices are inverted relative to domestic levels, and chemical products and steel prices remain elevated. Domestically, demand for coal used in chemical production stays at a high level; hot metal production increases; and demand for building materials rebounds. Social inventories are at a low level. Combined with the low average base for coal’s price in the second quarter of last year, coal prices are expected to rise sequentially, and the year-over-year price increase is expected to expand.

Cinda Securities believes that, based on an assessment of the energy production capacity cycle, constraints on the coal supply bottleneck may continue until the “15th Five-Year Plan” period. It will still be necessary to newly plan and build a batch of high-quality production capacity to secure China’s long-term energy coal demand. Against the backdrop of an accelerated westward shift in coal deployment and a substantial increase in resource fees and investment per ton of coal, both the rigid cost of developing China’s domestic economy and the increase in the cost of imported coal from overseas are expected to support maintaining the coal price’s center of gravity at a high level. Currently, the coal sector is still a high-performance, high-cash-flow, high-dividend asset class. The industry still has the characteristics of high prosperity, long cycles, and high barriers. The coal sector’s downward adjustment has a safety margin supported by high dividend yields, while its upside has elasticity with further catalysts from expectations of additional coal price increases. It continues to have a comprehensive bullish outlook on the coal sector.