Zhongtai Securities' research report indicates that Q3 2025 saw significant divergence in production and sales volumes among listed coal companies, with per-ton coal prices declining year-over-year while costs showed mixed trends. Financially, revenues, profits, and operating cash flows improved markedly quarter-over-quarter. Thermal coal benefited from more flexible long-term contract pricing mechanisms (annual volume with monthly pricing for thermal coal vs. quarterly pricing for coking coal), delivering notably stronger profitability than coking coal. The upward trajectory of the new coal cycle has been largely confirmed, with favorable fundamentals and trading dynamics creating compelling investment opportunities. Key insights follow:

**Price Trends: Bottoming Out, Entering New Cycle** - *Spot Prices*: Clear rebound signals emerged. Thermal coal (Q5500, Shanxi origin, Qinhuangdao port) averaged ¥672/ton in Q3 (July/Aug/Sept: ¥638/690/691), down ¥176 YoY but up ¥41 QoQ. Coking coal (main coking coal, Jingtang port) averaged ¥1,562/ton (July/Aug/Sept: ¥1,437/1,627/1,627), down ¥332 YoY but up ¥247 QoQ. YoY declines narrowed significantly from Q2. - *Contract Prices*: Thermal coal long-term contracts (CCTD Q5500) averaged ¥669/ton (flat QoQ), while coking coal contracts (Henan origin) held at ¥1,448/ton (steady QoQ). Both remain at low levels awaiting recovery.

**Production & Sales: Divergence in Output** Among 14 listed firms including CHINA SHENHUA (01088), self-produced coal volumes varied widely: Yongtai Energy posted an 8.2% YoY output gain versus Lanhua Sci-Tech’s 69.8% drop. Per-ton selling prices fell universally YoY, with cost trends mixed—Shanxi Coal International saw a 22% cost increase while Lanhua Sci-Tech reduced costs by 21.2%.

**Financial Performance: QoQ Recovery** - Sector revenue fell 11.1% YoY but rose 12.1% QoQ, led by thermal coal (-6.7% YoY, +14.0% QoQ). Coking coal lagged (-27.2% YoY). - Net profit declined 24.0% YoY but jumped 21.3% QoQ, with thermal coal (-16.3% YoY, +29.3% QoQ) outperforming coking coal’s steep drops (-84.1% YoY, -68.0% QoQ). - Operating cash flow dipped 12.8% YoY but grew 11.9% QoQ, with coking coal showing stronger sequential growth (+23.8%).

**Fund Holdings: Underweight but Improving** Coal sector’s Q3 fund allocation rose 0.10ppt to 0.65%, still below its 1.50% market cap weight. CHINA SHENHUA (01088) remained the top holding, while Lu’an Environmental Energy led in QoQ市值 growth.

**Investment Recommendations** *High-Beta Picks*: Yankuang Energy (600188.SH), Shanxi Coal International (600546.SH), Jinneng Holding (601001.SH), Shaanxi Coal (601225.SH), Lu’an Environmental Energy (601699.SH), Huaibei Mining (600985.SH), Pingmei (601699.SH), Shanxi Coking Coal (000983.SZ). *Value Plays*: CHINA SHENHUA (601088.SH, 01088), CHINA COAL (601898.SH, 01898), Xinji Energy (601918.SH), Huaihe Energy (600575.SH). Others like Lanhua Sci-Tech (600123.SH) may benefit.

**Risks**: Policy shifts, coal price volatility, data timeliness, and model limitations.