3Q25 results in line with our expectations

Jinneng Holding Shanxi Coal Industry announced its 3Q25 results: Revenue fell 17% YoY to Rmb9.33bn in 1–3Q25, with revenue falling 13% YoY to Rmb3.36bn in 3Q25. Net profit attributable to shareholders fell 41% YoY to Rmb1.28bn in 1– 3Q25. Attributable net profit fell 44% YoY to Rmb401mn in 3Q25 (+10% QoQ). The firm's 3Q25 results are in line with our expectations.

Comments

3Q25 output and sales volume fell QoQ: According to corporate filings, the firm's coal output rose 1.5% YoY to 26.19mnt in 1–3Q25, and its commercial coal sales volume fell 5.5% YoY to 20.86mnt. In 3Q25, coal output rose 1.1% YoY to 8.97mnt (-4.2% QoQ), and commercial coal sales volume fell 0.7% YoY and 5.9% QoQ to 7.56mnt. We attribute lower sales volume to weak downstream demand and a decline in the washout ratio amid adjustments in the calorific value of coal in Tashan.

Coal prices recover QoQ in 3Q25: In 1–3Q25, the firm's coal price per tonne fell Rmb71 YoY to Rmb423/t, and its cost per tonne edged up YoY to Rmb262/t. Weak coal prices weighed on profit. We estimate that the Selian mine has incurred losses, weighing on the firm's earnings. In 3Q25, coal price rose Rmb14 QoQ to Rmb424/t, implying a recovery in coal prices.

Debt ratio continues to decline and financial performance is solid: In 1–3Q25, the company's operating cash flow was Rmb1.51bn and its capex was Rmb699mn; its debt-to-asset ratio was 21.2%, down 7.7ppt from end- 2024. Cash on hand was Rmb13.94bn, remaining ample.

Trends to watch

Recovering coal prices bolster earnings improvement. We expect thermal coal supply and demand to improve marginally. As of October 24, the spot price of 5,500kCal coal in Qinhuangdao fell 11% YoY but rose 10% QoQ. Looking ahead, we are optimistic that thermal coal prices will continue to stabilize and recover in 4Q25, given the upcoming peak season for thermal coal and limited upside in sector supply. The company has a flexible sales structure and is poised to benefit from the rebound in coal prices.

Panjiayao mining area to be the firm's volume growth engine in the medium-to-long term. In early 2025, the firm announced plans to add the Panjiayao mine to its asset portfolio, which we estimate will increase the firm's resources, recoverable reserves, and approved capacity by 44%, 49%, and 29% and support its medium-to-long-term resource succession.

Financials and valuation

We keep our 2025 and 2026 earnings forecast unchanged. The stock is trading at 15x 2025e and 14x 2026e P/E. Given marginal improvement in thermal coal supply and demand, we maintain an OUTPERFORM rating and raise our target price 14% to Rmb16. Our TP implies 15.7x 2025e and 15x 2026e P/E, implying 8% upside.

Risks

Disappointing demand; higher-than-expected capex; higherthan- expected coal imports and domestic supply.