Industry|Coal demand is strong and prices are rising, and many coal companies predict a sharp increase in net profit in the first half of the year

LONGi industry news

On Jul.11th, the 2022 semi-annual performance forecast released by listed companies in the coal industry such as Jinkong Coal Industry and Shanxi Coking Coal showed that, benefiting from the factors that strong coal market demand and rising prices, the performance of related listed companies achieved substantial growth.

Lin Boqiang, the dean of China Energy Policy Research Institute of Xiamen University, told the “Securities Daily” reporter, “In the first half of 2022, driven by the policy of ensuring supply and stabilizing prices, the high-quality coal production will be released rapidly, and the performance of related companies will achieve substantial growth. In the future, the coal industry will still be in a state of tight balance. The coal companies should seize the current opportunity period to achieve the corporate development and transformation.

From January to June 2022, Jinkong Coal is expected to achieve a net profit attributable to the parent of about 2.3 billion yuan, a year-on-year increase of 940 million, a year-on-year increase of 70 percent; Shanxi Coking Coal is expected achieve a net profit of 5.346 billion to 5.930 billion yuan attributable to the parent. Panjiang Shares are expected to achieve a net profit of 1.2 billion to 1.4 billion yuan attributable to parent, a year-on-year increase of 159.74 percent to 203.03 percent; Huayang Shares are expected to achieve a net profit of 3.05 billion to 3.552 billion yuan attributable to parent, a year-on-year increase of 164.90 percent to 208.30 percent.

Regarding the reasons for the high grow in performance in the first half of 2022, the relevant listed companies all said that they were affected by favorable factors such as strong coal market demand and rising prices. Panjiang Shares stated that in the first half of 2022, due to factors such as market supply and demand, coal prices were running at a high level, and the company’s coal sales prices rose significantly compared with the same period last year. At the same time, through careful organization of production, the company gradually released coal production capacity, and the production and sales of commercial coal increased to a certain extent compared with the same period of the previous year. Shanxi Coking Coal said that due to factors such as strong coal market demand and rising prices, the company’s coal product profits increased significantly year-on-year. Jinkong Coal Industry said that due to the high price of coal, the company’s coal price rose year-on-year, resulting in a large year-on-year increase in the company’ current performance.

Yang Jie, a researcher at the Easy Coal Research Institute, told the "Securities Daily" reporter, "From the perspective of specific data, the national coal production from January to May 2022 increased by 10.4% year-on-year, and the average closing price of North Port 5500K from January to June 2022 was a year-on-year increase of 51%. The rise in volume and price is the main reason for coal companies to achieve high performance growth.”

"For enterprises, this stage is a rare transition period." Yang Jie said, "At present, China is still in a period of production capacity release, and energy prices are also at historically high levels. Coal companies should seize the opportunity to promote technological reform, reduce costs and increase efficiency, and expand profits, while ensuring safe production and long-term supply guarantees. Under the goal of the 'double carbon', coal companies need to increase the proportion of clean energy investment.

Regarding the development trend of the coal industry in the second half of the year, Lin Boqiang believes that "the National Development and Reform Commission has clearly proposed to crack down on hoarding, price gouging, and publishing false price information, which will effectively promote the orderly operation of coal futures and spot market prices within a reasonable price range. In the second half of this year, the performance growth rate of the coal industry may slow down year-on-year, but the high prosperity of the coal industry will continue for a period of time in the future."