Chinese coal miners rally on strong performance in H1, expectation of continued growth in H2

 

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Shares of Chinese coal miners stage a strong rally in mainland China and Hong Kong after the sector posted strong first-half performance and amid expectation of continued growth in the second half of the year.

In mainland China, an index tracking coal mining companies compiled by Wind Information surged by 4.7% in the morning session on Thursday, making it the best-performing sector in the A-share market, compared to 0.2% gain for the benchmark Shanghai Composite Index. Shaanxi Coal Industry surged more than 9% to hit a new record high, Jinneng Holding Shanxi Coal Industry surged 6.5%, Shanghai Datun Energy Resources up 6.2, Yankuang Energy jumped nearly 5%.

In Hong Kong, Yitai Coal surged 4.4%, China Coal up 3.85%, Yankuang Energy up 3.7% and China Shenhua up 2.8%.

China’s major listed coal miners made a combined net profit of 144.1 billion yuan over the first half of the year, surging 109% from a year earlier, according to data compiled by Citic Securities. Net profit on thermal coal, metallurgical coal and anthracitic coal was 19.5 billion yuan, 28.1 billion yuan and 33.5 billion yuan, respectively.

By quarters, most coal miners saw second-quarter earnings jump from the previous quarter and the sector’s total net profit rose by 45% from the previous three months due to rising coal prices and improving profit margin, showed the data.

In addition, coal miners’ receivables, inventory ratio and operating cash flow improved significantly, said Citic Securities, adding that the sector’s growth momentum is expected to remain strong in the third quarter and further expansion is expected in the fourth quarter.