Guohai Securities: The upward shift in the coal price center drives a year-on-year recovery in coal companies' performance
The Zhitong Finance App learned that Guohai Securities released a research report saying that in the first half of 2026, the 27 listed coal companies that the bank focused on achieved a total operating income of 640.616 billion yuan, an increase of 6.5% over the previous year; in total, net profit attributable to the parent company was 75.506 billion yuan, an increase of 23.5% over the previous year. The profit recovery mainly benefited from good coal price performance. The bank believes that under strong safety supervision, domestic production is tight or sustainable, and coal prices are expected to operate strongly. Leading coal companies present the five characteristics of “high profits, high cash flow, high barriers, high dividends, and high safety margins” to maintain the “recommended” rating for the coal mining industry.
Guohai Securities's main views are as follows:
Performance: The performance of 27 key coal companies increased year-on-year in the first half of 2026
In the first half of 2026, the performance of the 27 key coal companies that the bank is concerned about increased year-on-year. The 27 listed coal companies that the bank focuses on achieved total revenue of 640.616 billion yuan in the first half of 2026, +6.5% year on year; total net profit of 96.422 billion yuan, +23.5% year on year; total net profit attributable to parent companies was 75.506 billion yuan, +23.5% year over year. If China Shenhua, which has a large influence on the industry, is excluded (the same reason for excluding China's Shenhua later), the remaining 26 listed coal companies achieved total operating income of 451,278 billion yuan in the first half of 2026, +5.9%; in total, net profit attributable to the parent company was 46.791 billion yuan, +39.5% over the same period last year.
Coal prices: Profit recovery mainly benefits from good coal price performance
The 2026 profit recovery for coal companies mainly benefited from the good performance of coal prices. In the first half of 2026, due to the upgrading of safety supervision after the mine disaster in Shanxi, domestic raw coal production declined year on year, partially compensated by the year-on-year increase in coal imports. Total demand for electricity consumption on the demand side continued to grow at +2.9% year-on-year, and demand for chemical coal remained strong. According to the bank's estimates, in the first half of 2026, the domestic coal supply growth rate was -1.4%, the coal demand growth rate was +2.4%, there was a gap between supply and demand, and overseas energy prices operated at a high level under the influence of the international situation, which together led to a year-on-year increase in the coal price center in the first half of 2026. By type of coal, the average price of thermal coal in Qingang (Q5500, produced in Shanxi) in the first half of 2026 was 769 yuan/ton, +14%; the average price of main coking coal in Jingtang Port (produced in Shanxi) was 1,767 yuan/ton, +28% year over year. In the first half of 2026, the average sales price of coal from 26 listed coal companies (excluding Guanghui Energy) was 490 yuan/ton, +7% (the increase was lower than the increase in market coal or related to the coal companies' executive cooperation); the average sales cost was 294 yuan/ton, which was basically the same year on year; the average gross profit was 196 yuan/ton, +18% year on year; gross profit margin was 40%, +4pct year on year.
Production and sales: Production declined year on year, sales volume was basically the same year on year
In the first half of 2026, coal production declined year on year, and sales remained basically the same year on year; after excluding China's Shenhua, sales increased year on year. The 25 listed coal companies (excluding Guanghui Energy and Shanxi Coking Coal) produced 712 million tons in the first half of 2026, -1.7% year over year, and sales volume 668 million tons, or -0.2% year over year. If China's Shenhua is excluded, the 24 listed coal companies produced 462 million tons in the first half of 2026, with sales volume of 424 million tons, +1.6% year over year. The top two coal companies that made a positive contribution to the year-on-year change in sales were: 1) Shaanxi Coal (the company expanded sales channels and flexibly adjusted sales strategies, self-produced coal sales increased by 3.26 million tons in the first half of 2026), 2) Shanmei International (the company took the initiative to develop new markets and explore new customer sources. In the first half of 2026, the sales volume of self-produced coal increased by 302 10,000 tons).
Expenses: The absolute value of expenses increased year-on-year during the period, and the cost rate declined slightly as revenue increased
In terms of expenses during the first half of 2026, the absolute value increased year-on-year, and the cost ratio declined slightly as revenue increased. In absolute terms, the cumulative cost of 27 listed coal companies in the first half of 2026 was 44.647 billion yuan, +1.4% year on year, including sales expenses of 4.908 billion yuan, +0.2% year on year, management expenses of 30.429 billion yuan, +2.4% year on year, and financial expenses of 9.310 billion yuan, or -1.1% year on year. Judging from the relative value (arithmetic average method), the period cost rate of the 27 listed coal companies in the first half of 2026 was 12.0%, -0.2pct year on year. Among them, the sales expenses rate was 0.9%, -0.1 pct year on year, the management fee rate was 8.4%, the year on year -0.2 pct, and the financial expense ratio was 2.7%, which was basically the same as the previous year. Taken together, against the backdrop of a year-on-year increase in coal prices, the absolute amount of expenses for coal companies increased during the period, but driven by a year-on-year increase in revenue, the cost rate declined year-on-year.
Special reserves: the total increase of 6.074 billion yuan for the 24 sample coal companies over the same period last year
In the first half of 2026, the special reserves of the 24 sample coal companies increased year-on-year, mainly due to the sharp increase in the special reserves of China Shenhua after completing the consolidation of 12 acquisition targets. Of the 24 coal companies counted by the bank (excluding Zhengzhou Coal and Electricity, Dayou Energy, Liaoning Energy, and Shenhuo Co., Ltd.), the total special reserves for the first half of 2026 were 72.325 billion yuan, an increase of 6.074 billion yuan over the previous year. The special reserves for the first half of 2026 increased by 8.477 billion yuan to 34.466 billion yuan over the same period last year (not mentioned). According to China Shenhua's 2026 semi-annual report, its special reserves for the end of 2025 were re-stated from 24.828 billion yuan to 24.828 billion yuan over the same period last year $324.91 billion. Excluding China's Shenhua, the total special reserves of the remaining 23 coal companies for the first half of 2026 were 37.859 billion yuan, a year-on-year decrease of 2,403 billion yuan. The reduction in special reserves offset costs to a certain extent, thereby increasing the release of performance.
Profitability: Most improvements, gross profit margin and net margin increased year-on-year
In the first half of 2026, most of the sample coal companies' profitability improved. In terms of gross sales margin, the average value of 27 listed coal companies in the first half of 2026 was 27.0%, +2.6 pct year on year, with 18 companies showing a year-on-year increase in gross margin; judging from the net sales margin, the average value of 27 listed coal companies in the first half of 2026 was 6.5%, +1.3 pct year on year, of which 19 companies increased their net interest rate; judging from ROE, the average value of 27 listed coal companies in the first half of 2026 was 1.3%, -0.5pct year on year. Of these, the ROE of 18 companies increased year on year and was excluded With two outliers, the average value of 25 listed coal companies in the first half of 2026 was 3.9%, +0.8 pct year on year.
Cash flow and liabilities: Operating cash flow increased year on year, balance ratio increased year on year
In the first half of 2026, operating cash flow increased year on year, and balance ratio increased year on year. The total operating cash flow of the 27 listed coal companies in the first half of 2026 was 140.021 billion yuan, +25% year on year; the total interest-bearing debt was 734.513 billion yuan, +34% year over year; the average balance ratio was 52.8%, +1.4pct year on year. Excluding China's Shenhua, the total operating cash flow of the 26 listed coal companies in the first half of 2026 was 85.357 billion yuan, +41% year over year; total interest-bearing debt was 565.744 billion yuan, +12% year over year; the average balance ratio was 53.3%, +1.1 pct year on year.
Operational efficiency: Both accounts receivable and inventory turnover days have declined
In the first half of 2026, both accounts receivable and inventory turnover days declined. In terms of accounts receivable, the average number of accounts receivable turnover days for 27 listed coal companies in the first half of 2026 was 30 days, compared to -1.6%. Excluding China Shenhua, the average number of accounts receivable turnover days for 26 listed coal companies was 31 days, -1.4% over the same period, improving repayment capacity; in terms of inventory turnover, the average number of inventory turnover days for the 27 listed coal companies in the first half of 2026 was 26 days, compared to -5.8%. If China Shenhua were excluded, the average number of days for 26 listed coal companies was 26 days, compared with -5.4%, sales efficiency is better.
Second quarter of 2026: The supply side contracted month-on-month, coal prices increased month-on-month, and the performance of coal companies increased month-on-month
In the second quarter of 2026, supply-side domestic production and imports both contracted month-on-month. Demand for thermal power declined month-on-month, but metallurgical demand for building materials recovered month-on-month. In 2026Q2, coal prices rose month-on-month, and the year-on-year increase was even more obvious. The 2026Q2 performance of major listed coal companies increased significantly from month to month. The 27 listed coal companies that the bank focuses on achieved total operating income of 355.732 billion yuan in 2026Q2, +24.9%; total net profit attributable to the parent company was 44.474 billion yuan, +43.3% month-on-month; total net profit attributable to the parent company after deduction was 44.62 billion yuan, +44.6% month-on-month. Excluding China's Shenhua (data for the first quarter was not restated), the 26 listed coal companies achieved a total net profit of 26.426 billion yuan in 2026Q2, +29.8% month-on-month, benefiting from the good performance of coal prices.
investment strategy
Overall, coal prices rose year-on-year in the first half of 2026 due to factors such as supply contraction in the context of stricter safety supervision and strong overseas energy support for domestic coal prices, and the performance of major coal companies improved markedly year-on-year. It should be noted that since the mining disaster in Shanxi in May, the country's raw coal production declined significantly year on year. From May to August 2026, raw coal production was -1.7%, -9.7%, -10.1%, and -7.7%, respectively. Domestic supply declined markedly year on year. According to current high-frequency data, overall supply is still tight under strong supervision (as of September 9, the capacity utilization rate in Shanxi was 87.9%, compared to 90.95% for the same period last year). Looking ahead, domestic production is tight or sustainable under strong safety supervision. On the import side, Indonesian coal supply is also disturbed by factors such as delays in RKAB approval and low inland water levels. Import supplementation may not be effective. Coal prices are expected to be strong, and considering the low base for the third quarter of the previous year, the coal companies' performance in the next quarter is worth looking forward to.
Looking at the general direction, the supply-side restraint logic of the coal mining industry has not changed. The demand side may fluctuate in stages, and prices also show some fluctuation and dynamic rebalance. After 30 years of experience in the industry, coal prices showed a volatile upward trend. The driving factors behind it include a rigid rise in labor costs, continued increase in safety investment and environmental protection investment, price increases for commodities such as raw materials and power, and increased taxation by local governments. Judging from the major trends in industry development, these driving factors still exist. There are still demands for coal prices to rise in the long term. The process may be tortuous, but the direction should be clear. Leading coal companies have high asset quality and abundant cash flow on their accounts, showing the five characteristics of “high profit, high cash flow, high barriers, high dividends, and high margin of safety”. At the same time, starting in 2025, many coal central state-owned enterprises, such as National Energy Group, Shandong Energy Group, China Coal Energy Group, and China Power Investment Group, launched plans to increase holdings and asset injection into their listed companies, which also unleashed benefits, demonstrating confidence in coal companies' development and enhancing enterprise growth and stability. It is recommended to focus on the value attributes of low-ranking coal sectors and maintain the “recommended” rating for the coal mining industry.
Risk Alerts
Risk of economic growth falling short of expectations; risk of policy regulation exceeding expectations; risk of continued replacement of renewable energy; risk of impact on coal imports; focus on risk of company performance falling short of expectations; risk of measurement errors; risk of disturbances in coal mine accidents; risk of falling coal prices beyond expectations; global trade friction.