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Our reporter Li Jiajia and Li Weilai reported from Beijing

Recently, coal listed companies have released performance forecasts intensively. According to the disclosed information, in the first half of this year, coal enterprises' performance was "cold", and the scope of losses further expanded, while power companies were "popular", with more lucrative profits, and the performance differentiation trend of the two sectors has become increasingly intensified.

Wind data shows that among the 33 constituent stocks covered by the coal index, 21 coal companies have announced their performance, and profits have collectively declined. In the first half of the year, there were 11 coal companies that were able to maintain profitability, and the number of loss-making companies reached 10, accounting for nearly half. It is worth noting that 5 companies have turned from profit to loss and are facing severe challenges. In contrast, power companies have performed well. Among the 93 power constituent stocks, 35 have released their first-half performance forecasts, of which 28 are profitable and 7 are loss-making, accounting for a relatively low proportion.

Lin Boqiang, director of the China Energy Policy Research Institute of Xiamen University, told the China Times that in the first half of the year, the power industry performed well, while the poor performance of coal enterprises was expected. As coal prices fell, the beneficiary was definitely the power industry, and the losers were coal enterprises. It should be noted that China is still dominated by coal, and the power industry is still dominated by coal-fired power.

10 listed coal companies suffered losses

According to the latest performance forecast, coal enterprises are under pressure as a whole, with five companies having net profits attributable to their parent companies exceeding the lower limit of 1 billion yuan. Among them, China Shenhua is still the industry leader, with net profits attributable to its parent companies of 28.6 billion yuan to 30.6 billion yuan in the first half of the year, down 8.1% to 14.1% year-on-year. Following closely behind are Lu'an Environmental Energy, Shanxi Coking Coal, Shanxi Coal International and Huayang Shares, which are expected to achieve net profits attributable to their parent companies of 2.05 billion yuan to 2.35 billion yuan, 1.716 billion yuan to 2.258 billion yuan, 1.25 billion yuan to 1.45 billion yuan, and 1.11 billion yuan to 1.51 billion yuan, respectively, with profits all cut in half.

In addition, although the six companies including Ji Zhong Energy, Lanhua Science and Technology, Shanghai Energy, Shanxi Coking, Panjiang Shares and Zhengzhou Coal and Electricity remained profitable, their profits were also halved. The decline in Panjiang Shares was the most significant, with profits falling sharply from 619 million yuan in the same period last year to between 34 million yuan and 41 million yuan, a drop of more than 93%.

Among the 10 loss-making companies, Shaanxi Black Cat and Dayou Energy saw their profits drop dramatically, reaching 524.19% to 602.22% and 313.01% respectively. It is worth noting that five companies, including Yunwei Co., Ltd., Anyuan Coal Industry, Baotailong, Dayou Energy and Meijin Energy, turned from profit to loss, with Meijin Energy suffering the worst drop, with an estimated loss of 650 million to 850 million yuan from a profit of 373 million yuan.

On the other hand, among the 35 power companies that have released their performance in the first half of the year, 27 companies have increased their profits year-on-year. Among them, the lower limit of net profit attributable to the parent company of three companies exceeded 1 billion yuan, with Guodian Power leading the way with a net profit of 6.4 billion yuan to 6.8 billion yuan, a year-on-year growth rate of 114.22% to 127.61%. Datang Power and Jiangsu Guoxin followed closely behind, achieving net profits attributable to the parent company of 2.8 billion yuan to 3.4 billion yuan, 1.7 billion yuan and 1.8 billion yuan, respectively, with year-on-year growth rates of more than 50%.

Among thermal power companies, Jiantou Energy, Ganneng Shares, and Beijing Energy Power also performed particularly well, with profits doubling, especially Jiantou Energy, with a net profit of 320 million yuan, a year-on-year increase of 279.68%. Jinshan Shares, Bindian International, and Huayin Power successfully turned losses into profits, among which Jinshan Shares' profit transformation was particularly significant, from a loss of 510 million yuan to a profit of over 100 million yuan.

With abundant domestic water supply, hydropower companies also performed well. Three Gorges Water Conservancy expects to achieve a net profit of 208 million to 246 million yuan attributable to the parent company, a year-on-year increase of 564.55% to 684.36%. The profit growth of Shaoneng Co., Ltd., Qianyuan Electric Power and Guangxi Energy Co., Ltd. also exceeded 100%, with year-on-year profit growth rates of 258.01% to 329.62%, 270.0% to 365.0% and 176.56% to 314.84% respectively.

Coal prices become the key "driving force" for profit decline

The reporter found that coal prices have become the key driving force behind the "ice and fire" phenomenon in the performance of coal and power companies.

In the coal industry, many giants have complained. China Shenhua said in its announcement that its net profit fell year-on-year, mainly due to the decline in the average sales price of coal and the decline in the average utilization hours of coal-fired units. Lu'an Environmental Energy also mentioned that its net profit fell significantly year-on-year, affected by the coal price cycle, and the price of commercial coal fell year-on-year.

On the other hand, the situation is quite different for power companies. Datang Power attributed the primary reason for the expected increase in performance to the year-on-year decline in fuel prices, and the company's thermal power fuel costs fell year-on-year. Jiangsu Guoxin, Jiantou Energy, Ganneng Shares, and Beijing Energy Power also said that the decline in coal prices or the decline in fuel costs had a positive impact on their performance.

Zeng Xiang, a thermal coal analyst at Yide Futures, told the China Times reporter, "As of July 15, 2024, the average closing price of 5,500 kcal in Beigang was 882 yuan/ton, compared with 1,023 yuan/ton in the same period last year, a decrease of 13.8%, a significant decline compared with the same period last year, and the fixed costs of coal companies have basically not changed much, so the price decline will be directly reflected in the contraction of profits."

As one thing increases, another decreases. As upstream coal companies, when prices fall, the fuel costs of downstream thermal power companies will decrease, and profits will naturally shift.

In addition, CCTD analysis put forward another point of view, they believe that the reason for the sharp decline in performance is more due to the decline in coal production, especially the decline in coal production in Shanxi Province, a major coal-producing province, which has led to a decline in industry profits. Although coal prices have fallen year-on-year, the price drop is not at the same level as the profit drop, especially for coking coal, which is smaller.

The latest data from the National Bureau of Statistics shows that more than 80% of my country's raw coal is supplied by Shanxi, Inner Mongolia, Shaanxi and Xinjiang. From January to June this year, the output of industrial raw coal above designated size was 2.27 billion tons, a year-on-year decrease of 1.7%.

In terms of imports, Zhao Li, a coal analyst at Zhuochuang Information, told reporters that from the perspective of import volume, according to data from the General Administration of Customs, from January to June 2024, my country's cumulative total coal imports were about 250 million tons, a year-on-year increase of 12.5%. Since 2024, the amount of imported coal in each month has shown an upward trend year-on-year, which has effectively supplemented the domestic coal supply. The overall supply and demand pattern of the domestic coal market is relatively loose. From the perspective of import price advantages, since 2024, imported coal has basically had a price advantage of more than 30 yuan/ton over domestic coal of the same calorific value. There has been an inversion at some time, but it lasts for a short time.

Zeng Xiang told reporters that this year, the impact of imported coal on domestic coal is still very large, especially in the coastal areas of South China. Imported coal has obvious advantages, and the arrival of large amounts of imported coal has led to very little demand for domestic coal in South China.

The performance differentiation trend in the second half of the year may weaken

"At present, coal has entered the peak summer period, but daily consumption is still showing negative growth year-on-year, while inventories are at a high level for the same period. As expectations for the peak season are gradually eroded, high inventories will suppress prices, causing subsequent prices to continue to be weak." Zeng Xiang said.

Zhao Li also said that the current domestic coal market supply and demand pattern is still relatively loose, and coal prices are under overall pressure. Looking ahead, the overall supply and demand relationship in the domestic thermal coal market may still be relatively loose in the second half of 2024, but supported by the peak coal consumption seasons such as the peak summer, golden September and silver October, and the peak winter, there is room for improvement in coal demand, so there is a possibility of a rebound in coal prices in the second half of the year, but the rebound space is limited.

In the second half of the year, can the coal industry reverse the passive situation of declining profits? CCTD analysis points out that it mainly depends on two factors: whether coal prices are stable and whether coal production can be increased.

In addition, the reporter noted that some industry insiders said that the key areas to focus on in the future are: first, the rise and fall of international coal prices, and the impact of imported coal on the domestic market; second, the impact on thermal power load after hydropower returns to normal; third, the persistence of high temperature weather, which will help destocking; fourth, whether important meetings can release a signal of economic improvement; and fifth, as safety supervision becomes stricter, coal supply and railway exports are suppressed to a certain extent.

Zhao Li analyzed that in the second half of 2024, due to the improvement in coal demand, coal prices will be supported to a certain extent, and the profit margins of coal production companies may improve, and the performance of power companies will also be slightly squeezed due to the increase in coal costs; however, the overall rebound space for coal prices is limited, and the profit transfer between coal production companies and power companies is expected to be relatively limited.

Editor-in-charge: Li Weilai Editor-in-chief: Zhang Yuning