In 2021, the coal industry rose one after another
In 2022, most of the active private placements with high performance have high "coal content".
In 2023, it will be the coal boss who will win in the end, is it not surprising?
The Hong Kong market is ranked from high to low according to the three-year rise and fall, and two of the top 10 are coal stocks - Yankuang Energy and China Coal Energy, which rose by more than 20% during the year. China's Shenhua, which is outside the top 10, has risen by more than 30% this year.
The total market capitalization of Mongolian coking coal (00975) is much smaller, and this year it has increased from 222 Hong Kong dollars once rose to 7HK$78.
"Three" is a very mysterious number in China. It has a deep relationship with a lot of "**, the six lines of the Book of Changes are composed of three hexagrams, the Tao Te Ching talks about three lives and all things, and the Tea Book talks about the three talents of heaven, earth and man, and we often say that "things are not three". Tomorrow will be a new investment year. Will the market cross three and usher in the fourth coal year?Can coal stocks still be bought now?
Let's start with my conclusion:Look at the strength of the market. The market is weak and can be bought.
First, in the weak market, coal stocks are good
Coal stocks have avoided most of the mines. First of all, there is no bubble in valuation, and the earnings ratio of coal stocks is less than 7 times, and the price-to-book ratio is less than 13 times, the asset-liability ratio is less than 50%;Secondly, the profitability is relatively good, there is no shortage of funds, there will be no financial fraud to inflate profits (some even hide profits), and there will be no low price to increaseAlmost all of them are central state-owned enterprises, and major shareholders do not cash out;There are few new mines, it is difficult to expand production, and there will be no overcapacity.
Coal stocks have high dividend yields. This makes it natural for coal stocks to effectively reduce the cost of holding and reduce the risk of holding shares through high dividends every year.
The coal sector is safe, high-interest, bubble-free and sustainable, and in a weak market, the coal sector is the sector with a thick safety cushion and the strongest defensive function.
Second, why has it risen well recently?
In September this year, this issue published an analysis article on "Coal Flying Color Dance, Geometry", pointing out that ** is not short-term, and can be expected in the medium term. After a wave of sharp rises in September, the coal sector began to take off again near the end of the year.
An ** "old cannon" joked that his experience was "frying coal in winter". There is indeed a seasonal factor in it.
On the demand side, with the recent arrival of a new round of cold air, the temperature in most parts of the country has dropped, the demand for electricity and heating has increased, the daily consumption of power plants is at a high level in the same period, and the coal consumption of the chemical industry has also shown signs of stabilization, and coal demand is expected to rise further. In addition to thermal coal used for power generation, steam, etc., coking coal and coke used for the production of steel have also increased the production enthusiasm of steel mills due to the slight increase in steel prices, and the demand for raw material procurement is improving. Trillions of national bonds have also further stimulated expectations on the domestic demand side. In addition, overseas steelmaking demand in India and other countries is strong (India's crude steel production increased by 12% from January to October), and domestic and foreign demand is resonant. On the supply side, there have been safety accidents in Huaibei, Anhui, Linfen, Datong and Lvliang in Shanxi Province recently, and the release of output during the year continues to be constrained by safety supervision, and the expectation of tightening is strengthened.
The role of the two sides has formed a solid support for coal prices. With the price of coking coal rising, the first round of coke increase is about to land.
Third, is there any motivation for the follow-up?
Yes. One view is to speculate from a cyclical perspective that the strength of coal stocks in this round is likely to exceed the 2016-2017 and 2020-2022 cycles.
The 2016-2017 cycle is mainly driven by real estate, and the 2020-2022 cycle is mainly driven by manufacturing. In the future, the pro-cyclical rebound of the real estate chain and the rebound of high-end manufacturing and high-tech industries may form a double resonance pull. However, it is difficult for the coal supply side to increase significantly, and coal prices may exceed the highest point in 2022.
There is also a view that coal stocks are moving away from the cyclical nature and moving towards utilities with the potential for a revaluation.
On December 8, the state issued the "Action Plan for Continuous Improvement of Air Quality", which requires strict and reasonable control of total coal consumption, which will reduce the cyclical nature of the coal sector. Yankuang Energy's secretary also said that "the cyclical nature of the coal industry is weakening".
Since the beginning of the supply-side reform, the state has consciously adjusted the relationship between supply and demand, and stabilized the fluctuation of coal prices through tariff policies and other means. For example, on December 20, the Customs Tariff Commission issued an announcement to resume coal import tariffs from New Year's Day. According to the free trade agreement, imported coal from Australia and ASEAN will continue to be subject to zero tariffsImported coal from other countries is subject to MFN rates, with tariffs of 3% for anthracite, coking coal and lignite, and 6% for thermal coal.
In addition to the dynamic adjustment of tariffs, the long-term agreement price and the newly released coal mine energy reserve system clearly indicate the country's intention and determination to reduce the cyclical volatility of the coal industry.
The coal industry has undergone great changes in recent years. On the production side, the current ** corresponds to more than twice the production cost. Coal companies will not consider reducing production when there are profits, and if they continue, they may consider reducing production, but they will not return to the old habit of disorderly competition and exchanging price for quantity. Moreover, the main resources of the domestic coal industry have been concentrated in the hands of state-owned enterprises, and the leading enterprises have a stronger control over coal supply. A large number of middlemen have disappeared, mainly using long-term supply prices and guaranteed prices, so in the next few years, the profits of the coal industry are likely to remain stable. The dividends of the coal industry will also be stable and generous, stable and gratifying. This sets the stage for a shift in valuations to "utilities".
Hong Kong coal stocks are currently generally valued at 5-7 times, and if they are valued at about 10-17 times according to the valuation of public utilities, taking Yankuang as an example, if the performance increases by 50% and the valuation doubles in the two years from 2023 to 2024, it will bring 200% of the space.
Fourth, those factors that need to be vigilant in investment.
First, according to the news obtained from institutional channels, since late August, with the increase in coal prices, insurance funds have increased their allocation to high dividends. From the time span in the future, the allocation rhythm of the high-stock period will definitely be slower, so it is expected that the stock price will continue to **, but the pace will be slower.
And this recent wave of ** can basically be determined to belong to the non-insurance funds chased out**, because the basic ** is the top of the plate is a relatively smiling and elastic target. Therefore, the participating funds may be dominated by non-institutional funds, and its sustainability basically depends on the rhythm of plate rotation. Overall, the trading logic is greater than the fundamental logic. Second, we need to pay attention to the supply situation overseas.
It is impossible for China to control the stability of the global coal supply with 16% of the world's reserves. If overseas coal production is expanded in a big way, there is a high probability that there will be an impact. In addition, the domestic wind, solar, and hydropower conditions should also be paid close attention to. In the absence of a breakthrough in new energy, coal is cost-effective.
Thirdly, often those who are prophetic can eat meat, and those who are late can only drink soup, which is the most important reason.
In the past three years, investing in coal stocks has been able to significantly outperform the market because cyclical stocks are notorious for big waves, and many people dare not touch this sector with this stereotype. However, now that the market is less and less biased against coal, there is no excess opportunity in the market.
On the other hand, whether it is restricting the production of inefficient coal mines or building coal reserve capacity, it provides a strong guarantee for the stable supply of coal. Maintaining stable supply and demand is also a double-edged sword, the positive side is that there will be no sharp fall, and the negative side is that there are no unexpected opportunities.
Fourth, the characteristics of the capital game.
As mentioned earlier, last year's public offering won the first place was coal**, and the private equity performance was also heavy in coal (you can search for CCTV's interview with Wang Wen on the Internet to take a look), but in fact, coal stocks fell sharply at the end of last year, how did they achieve high returns?This year, coal companies first pulled up, then smashed and then pulled up. Wait until around November, similar drop-and-pull pull-up reappeared. This may be the main force of the institution at the end of the year when the weather is cold and the good news is frequent, which can amplify the income. **When entering the warehouse, you should fully consider this feature, and it is particularly important to buy points, and do not chase after the high.
In short, in the context of energy inflation, high-quality coal companies still have the attributes of high barriers, high cash, high dividends and high dividends, and the characteristics of both offensive and defensive sector investment and high cost performance will not change in the short term. The revaluation of the coal sector is still on the way, and there are trading opportunities before a significant overvaluation. Defensive**, trading opportunities arise in scenarios where the market is weak. If a bull market comes, undetermined funds may take profits and run to other tracks. Fifth, finally, how to choose coal stocks?
It is recommended to focus on coking coal stocks, which benefit from the recovery of real estate, without the impact of price restrictions, and the supply is scarce and difficult to be replaced.
(1) The plate is small and elastic. mongol mining(00975)This stock used to be called Mongolian coking coal. This stock is special and does not pay dividends. One of the reasons is that the perpetual bonds borrowed in 2017 require no dividends until they are repaid. As for the reason for not paying dividends before 2017, it was a loss for 5 consecutive years from 2012 to 2016. However, judging from the current cash flow, if we have the ability to repay all the perpetual bonds next year, we will have the ability to pay dividends in 2025. The market's performance of Mongolian coking coal in 2024 is not based on coking coal, but is driven by the following factors: First, Mongolia's coal is basically the first domestic businessmen to help him dig coal, and then transport the coal to the port, and then sell it to China. Now Mongolia wants to take back this part of the pricing power, hoping to set up a bidding mechanism at the port price, if this is the case, it will leave more profits to the miners. Second, the domestic Australian coal imports have fallen sharply, and they can only rely on Mongolian coal (the speed and volume of Australian main coke import clearance have been greatly reduced, if Sino-Australian relations continue to freeze, it is foreseeable that 40% of Australia's main coke import share will be gradually replaced by Mongolian coke. The completion of the China-Mongolia railway will bring about an increase in transportation volume and a significant reduction in transportation costs. 
(2) Those with strong dividend distribution ability and relatively low price-to-book ratio.
Yankuang Energy (01171).According to the information from the recent roadshow, it is determined that the fourth quarter performance is very good, the dividend will be good (the market speculates that the dividend may be 60-70%), and the coal production capacity will increase quickly in the future.
High-quality resources are Yankuang's biggest core competitiveness, the company has three open-pit mines in Australia, and has added 16.5 billion tons of recoverable reserves after the acquisition of Luxi Mining and Xinjiang NenghuaMoreover, industrial synergy is also one of the advantages, the company realizes the integration of coal and chemical industry, and chemical industry will be an important direction of coal consumption.