Zheshang: The coal industry's performance in the first quarter is relatively stable. Coal prices are expected to rebound in mid-May.

Zheshang released a research report stating that in the first quarter, demand was weak due to factors such as holidays and high temperatures, leading to an increase in supply and a decrease in coal prices. However, due to the long-term contract price system, the performance of thermal coal enterprises in the first quarter was relatively stable. It is necessary to pay attention to the improvement in demand in the future; it is expected that there will still be downward pressure on coal prices in the short term, with a rebound expected in mid-May. In terms of policies, the Coal Association has proposed controlling output and improving quality. Current demand may be at its lowest for the year, and with a decrease in supply, coal prices are expected to rebound in the peak season. Key points from Zheshang: Coal supply: From January to March 2025, sales volume of the top 20 coal groups showed a slight decline, while national coal production continued to increase. Top 20 coal groups: From January to March, the daily average sales volume was 6.806 million tons, a decrease of 3.5% year-on-year; in March, the daily average sales volume was 7.149 million tons, a decrease of 3.1% year-on-year. National coal production: From January to March, production was 1.2 billion tons, an increase of 8.1% year-on-year; in March, production was 440 million tons, an increase of 9.6% year-on-year. Coal and brown coal imports: From January to March, imports were 110 million tons, a decrease of 0.9% year-on-year; in March, imports were 38.73 million tons, a decrease of 6.4% year-on-year. Coal demand: From January to March 2025, national coal consumption slightly decreased, with a 1.8% increase in March compared to the previous month. Consumption of commodity coal: From January to March, coal consumption was 1.27 billion tons, an increase of 0.2% year-on-year; in March, coal consumption was 390 million tons, an increase of 1.8% year-on-year. Power industry: From January to March, coal consumption was 740 million tons, a decrease of 3% year-on-year; in March, coal consumption was 240 million tons, a decrease of 1.3% year-on-year. Chemical industry: From January to March, coal consumption was 100 million tons, an increase of 10.9% year-on-year; in March, coal consumption was 40 million tons, an increase of 9.4% year-on-year. Building materials industry: From January to March, coal consumption was 90 million tons, a decrease of 1.1% year-on-year; in March, coal consumption was 40 million tons, an increase of 2.3% year-on-year. Steel industry: From January to March, coal consumption was 170 million tons, an increase of 2.2% year-on-year; in March, coal consumption was 60 million tons, an increase of 3.4% year-on-year. Coal prices: Overall, coal prices in the first quarter showed varying degrees of decline. Thermal coal (Guangzhou Port): From January to April, the price was 767.6 yuan/ton, a decrease of 151.4 yuan/ton or 16.5% year-on-year; coking coal (Jingtang Port): From January to April, the price was 1428.2 yuan/ton, a decrease of 894.2 yuan/ton or 38.5% year-on-year; anthracite coal (Yangquan): From January to April, the price was 910.5 yuan/ton, a decrease of 46.9 yuan/ton or 4.9% year-on-year. Long-term contract price for thermal coal: From January to April, the price was 687.3 yuan/ton, a decrease of 19.5 yuan/ton or 2.8% year-on-year. Performance summary: Overall, the performance of the coal sector in the first quarter declined. In general, the net profit attributable to the parent company of the coal sector of CITIC Securities in Q1 2025 totaled 24.12 billion yuan, a decrease of 41.5% year-on-year. By sub-sector, the profit of the thermal coal sector decreased by 35.9%, the profit of the anthracite coal sector decreased by 37.6%, the profit of the coking coal sector decreased by 69.5%, the profit of the coke sector reduced losses, and the profit of other coal chemical sectors decreased by 64.5%. Out of 37 listed companies, 25 were profitable, which is 2 fewer than the same period last year. Out of the 25 profitable listed companies, 23 saw a year-on-year decrease in net profit attributable to the parent company. Target suggestions: Invest in coal companies with high dividends at low points. Focus on thermal coal companies such as China Shenhua Energy (601088.SH), Shaanxi Coal Industry (601225.SH), China Coal Energy (601898.SH); For coking coal companies, focus on Huaibei Mining Holdings (600985.SH), Shanxi Lu'an Environmental Energy Dev.Co.,Ltd (601699.SH); Also pay attention to coke companies that have improved profits year-on-year such as Jinneng Science & Technology (603113.SH), Shanxi Meijin Energy (000723.SZ). Risk warning: Overseas economic slowdown; Massive release of production capacity; Replacement by new energy sources; Impact of safety accidents.