In Q1 2024, the coal industry had excellent market performance, outperforming the Shanghai Composite Index by a large margin. It had both excess and absolute returns, and ranked third in the growth rate of Shenwan's Tier 1 industry.
The Zhitong Finance App learned that Debon Securities released an analysis of fund holdings in the coal industry for the first quarter of '24, indicating that in the first quarter of 2024, the coal sector clearly surpassed the Shanghai Composite Index, and had both excess and absolute returns. Judging from the performance of the sub-industry, thermal coal > coking coal > coke increased and decreased by 19.24%, -0.29%, and -9.16%, respectively. Judging from the market value of positions, the total market value of coal stocks held in the first quarter was 39.258 billion yuan, accounting for 1.44% of the market value of mainland public fund holdings, an increase of 0.08 pct over the third quarter. After excluding Hong Kong stocks, coal stocks accounted for 1.4% of the market value of heavy public fund holdings, an increase of 0.1 pct over the previous month; the low allocation margin was 1.0%, an increase of 0.35 pct over the previous month.
The main views of Debon Securities are as follows:
In the first quarter of 2024, the excess earnings in the coal sector were obvious. In Q1 2024, the coal industry had excellent market performance, outperforming the Shanghai Composite Index by a large margin, and having both excess and absolute returns, ranking third in Shenwan's Tier 1 industry. In the first quarter of 2024, the coal sector rose 10.46%, the Shanghai Composite Index rose 2.23%, and the coal sector surpassed 8.24 pcts. Judging from the performance of the sub-industry, thermal coal > coking coal > coke increased and decreased by 19.24%, -0.29%, and -9.16%, respectively.
The coal sector accounts for 1.44% of holdings, and the allocation is still low. Judging from the market value of positions, the total market value of coal stocks held in the first quarter was 39.258 billion yuan, accounting for 1.44% of the market value of mainland public fund holdings, an increase of 0.08 pct over the third quarter. Using the share of the market value in circulation in the industry as the reference basis for the standard fund allocation ratio, as of the end of the first quarter of 2024, the market value of A-shares in circulation was 65.6 trillion yuan, and the market value of the coal industry in circulation was 1.57 trillion yuan, accounting for 2.40%. After excluding Hong Kong stocks, coal stocks accounted for 1.4% of the market value of heavy public fund holdings, an increase of 0.1 pct over the previous month; the low allocation margin was 1.0%, an increase of 0.35 pct over the previous month.
The Shaanxi coal industry received the most public equity holdings, and Xinji Energy received a significant increase in its holdings. Judging from changes in total shareholding, Xinji Energy, China Coal Energy, Shanxi Coking Coal, Huaibei Mining, and China Coal Energy.HK ranked in the top five, increasing their holdings by 2.35, 0.38, 0.10, and 0.09 billion shares respectively. Judging from the changes in the market value of shares held in the market value of the fund's stock investment, Xinji Energy, China Coal Energy, Yankuang Energy, and Shanxi Coking Coal ranked in the top five, with 0.04%, 0.15%, 0.03%, 0.05%, and 0.02% respectively, up 0.0353 pct, 0.0216 pct, 0.0112 pct, 0.0106 pct, and 0.0071 pct from the fourth quarter of 2023, respectively.
Long-term holding of coal stocks has yielded remarkable returns, and high dividends highlight investment value. Long-term holding income mainly includes capital gains and dividend income. It is calculated by measuring the stock price earnings and dividend income of each sample company from listing to the end of the first quarter of 2024. The average compound income of the companies in the sample was 9.4%. If dividend earnings are reinvested, the average compound reinvested return is 10.1%. As of April 24, 2024, the average dividend rate for coal stocks in the sample is expected to be as high as 6.5%.
Investment suggestions: With the Politburo meeting held on July 24, 2023, and the two offices issued “Opinions on Further Strengthening Work Safety in Mines” on September 6, the fundamentals and expectations of the coal industry have changed significantly; in 2024, the State Assets Administration Commission will fully implement market value management for state-owned enterprises, and the Securities Regulatory Commission will promote high-quality dividends from listed companies, further highlighting the investment value of coal stocks. Maintain the sector's “better than market” rating. Three directions are recommended:
1) Bifocal elasticity. In anticipation of recovery, there is room for bifocal to rebound after experiencing a sharp drop in prices in the early period. Recommended: Lu'an Huanneng (601699.SH), Pingmei Co., Ltd. (601666.SH), Huaibei Mining (600985.SH), China Xuyang Group (01907). It is recommended to focus on: Shanxi Coking Coal (000983.SZ), Shaanxi Black Cat (), etc. 601015.SH
2) Premium dividends. High-quality companies have long-term dividend capacity, and there is room for continuous improvement in dividend rates as capital expenditure declines. Recommended: Shaanxi Coal (601225.SH), Mountain Coal International (600546.SH), China Coal Energy (601898.SH). It is recommended to focus on: China Shenhua (), Yankuang Energy (USD), and Orchid Science and Technology (). 601088.SH 600188.SH 600123.SH
3) Long-term increments. Companies that have released production capacity will be more explosive when the next cycle starts. It is recommended to focus on: Guanghui Energy (600256.SH), Huayang Co., Ltd. (600348.SH), Haohua Energy (601101.SH), etc.
Risk warning: Overseas economic recession exceeds expectations; domestic economic recovery falls short of expectations; risk of major coal safety accidents.