The coal sector surges strongly, with Lanhua Sci-Tech and Shanmei International hitting the daily limit

The coal sector surged strongly during the trading session on the 9th. As of the latest report, Lanhua Sci-Tech and Shanmei International hit the daily limit up, China Coal Energy and Yankuang Energy rose over 9%, and China Shenhua increased by more than 7%.

In terms of news, due to the ongoing escalation of geopolitical tensions in the Middle East, energy prices such as natural gas have soared. Under the energy substitution effect, international coal prices have risen to their highest levels in over two years.

Fangzheng Securities pointed out that recently, the escalation of Middle Eastern conflicts has raised concerns about potential disruptions to crude oil supply, causing international oil prices to rise accordingly. Based on the logic of energy substitution, the expected demand for coal is likely to improve. Additionally, considering the significant production cuts by the Indonesian government earlier this year, which triggered a coal shortage in the international market, current coal inventories in Indonesia and overseas are rapidly declining. The cost of imported coal in China has increased, leading to a quick rise in port coal prices. Coupled with the growing electricity demand for AI applications in the future, coal prices are expected to see substantial growth.

The institution believes that the tightening of supply in the coal industry has become an investment theme. The oversupply situation is expected to reverse, and as policies to tighten capacity continue to be implemented through 2026, restrictions on coal imports can also be anticipated. With high proportions of long-term contracts, China Shenhua and China Coal Energy have relatively stable performance. If coal prices remain high, undervalued targets like Yankuang Energy (Hong Kong stocks) and China Coal Energy (Hong Kong stocks) may also see valuation recovery.