2Q25 results miss our and market expectations Huaibei Mining Holdings announced its 1H25 results: Revenue fell

44.64% YoY to Rmb20.61bn, and net profit attributable to shareholders fell 64.85% YoY to Rmb1,032mn. In 2Q25, revenue reached Rmb10.08bn, and attributable net profit fell 74.73% YoY and 50.8% QoQ to and Rmb340mn, missing our and market expectations due to sharper-than- expected decline in coking coal prices in June.

Comments Coal business: The output and sales volume of commercial coal in

1H25 (excluding domestic sales, the same below) dropped 14% and 19% YoY to 8.91mnt and 6.48mnt, mainly because output of some mines fell in 1H24 due to geological conditions. In 2Q25, commercial coal output fell 10% YoY and rose 7% QoQ to 4.6mnt, and sales volume dropped 13% YoY and rose 18% QoQ to 3.5mnt.

Long-term contract prices for main coking coal dropped by around Rmb110/t in April and May, and spot prices continued to fall by around Rmb100/t to Rmb1,330/t. In 2Q25, the firm’s overall ASP declined by Rmb364/t YoY and Rmb190/t QoQ to Rmb748/t, which is the main reason for the higher-than-expected earnings. Cost per tonne fell by Rmb111/t YoY and Rmb94/t QoQ to Rmb426/t. In 2Q25, gross profit per tonne decreased by Rmb253/t YoY and Rmb96/t QoQ to Rmb322/t.

Coal chemical business: Production and sales volume of coke reached 1.71mnt and 1.68mnt in 1H25, and 0.97mnt and 0.98mnt in 2Q25. ASP reached Rmb1,418/t in 1H25, and rose 4% YoY and 35% QoQ to Rmb2,020/t. We think the business segment’s losses significantly narrowed.

Methanol production and sales volume in reached 0.31mnt and 0.12mnt in 1H25, and 0.19mnt and 0.07mnt in 2Q25. ASP was Rmb2,133/t in 1H25, and dropped 6% YoY and 7% QoQ to Rmb2,070/t. Ethanol production and sales volume reached 0.23mnt and 0.22mnt in 1H25, and 0.13mnt and 0.13mnt in 2Q25. ASP was Rmb4,896/t in 1H25, and fell 8% YoY and rose 4% QoQ to Rmb4,979/t in 2Q25.

In 1H25, operating cash flow was Rmb2.1bn, capex was Rmb3bn, and debt-to-asset ratio was around 48%.

Trends to watch Expect earnings to improve QoQ in 3Q25. Coking coal prices bottomed

out in June amid anti-involvement policies and restocking by downstream steel mills. The long-term contract price of main coking coal is now at Rmb1,460/t. Looking ahead, we expect coking coal prices to rebound and stabilize. We expect earnings to recover QoQ in 3Q25, and coking coal prices in 4Q25 will mainly depend on melted iron demand.

Full-year output forecast lowered; watch resumption of production at

Xinhu and Taohutu in 2026. As the resumption of production at the Xinhu mine is slightly slower than expected, we think full-year output and sales volume (both including domestic sales) will fall by more than 1mnt YoY to less than 19mnt. For 2026, we expect full-year output and sales volume to rise to more than 24mnt if Xinhu mine resumes production and ramps up and Taohutu starts production, boosting earnings growth.

Financials and valuation

Due to the sharper-than-expected decline in coking coal prices in 2Q25, we lower our 2025 and 2026 earnings forecasts 37.7% and 29.2% to Rmb2.09bn and Rmb2.48bn. The stock is trading at 16.3x 2025e and 13.7x 2026e P/E. We maintain OUTPERFORM and, given that coking coal prices have stabilized at the bottom, we maintain our target price of Rmb15, implying 19.5x 2025e and 16.3x 2026e P/E, offering 19% upside.

Risks

Disappointing demand for melted iron; sharper-than-expected decline in prices; resumption of production at Xinhu and production at Taohutu miss expectations.