2025 and 1Q26 results in line with expectations Shaanxi Coal announced its 2025 and 1Q26 results: In 2025, attributable net profit fell 25% YoY to Rmb16.8bn, and recurring attributable net profit dropped 27% YoY to Rmb15.3bn, mainly due to falling coal prices. In 1Q26, net profit attributable to shareholders fell 12% YoY to Rmb4.2bn, and recurring net profit dropped 7.5% YoY to Rmb4.2bn. The 2025 and 1Q26 results are in line with our expectations.

2025 results review: 1) Coal sales stable. Commercial coal output rose 2.6% YoY to 175mnt in 2025, while sales volume of self-produced coal was largely flat YoY at 159.8mnt. 2) Selling prices declined. ASP of self-produced coal fell 17% YoY to Rmb444/t in 2025. The market price of thermal coal in Yulin fell 22% YoY to Rmb663/t. 3) Cost per tonne of coal is stable. The all-in cost per tonne of raw coal fell 0.5% YoY to Rmb288.58 in 2025. 4) Gross profit per tonne of self-produced coal fell 25% YoY to Rmb258 in 2025. 5) In 2025, electricity sales volume increased 12% YoY to 39.3bn kWh, the electricity sales price dropped 0.9% YoY to Rmb395.6/MWh, and all-in cost per kWh fell 1.7% YoY to Rmb335.6/MWh. 6) The firm plans to pay a dividend of Rmb8.811bn in 2025, implying a total dividend of Rmb9.19bn, accounting for 60% of the firm’s distributable profit in 2025.

1Q26 results review: Coal output and sales volume increased. In 1Q26, coal output rose 3.2% YoY and 1.8% QoQ to 45.34mnt, and sales volume of self-produced coal rose 6.0% YoY and 3.6% QoQ to 41.92mnt. Electricity sales volume also increased. In 1Q26, power sales volume rose 20% YoY and 1.8% QoQ to 10.48bn kWh, driven by the operation of the Yiyang power plant.

Trends to watch

1) Chemical coal booming. Given the wide oil-coal price spread, we expect demand for coal chemicals to improve andoperating rates of certain coal chemical facilities to remain high in the near term, supporting the firm’s sales volume of chemical coal business. 2) Upbeat on rising thermal coal prices. The spot price of thermal coal at Qinhuangdao has gradually risen since April, and we expect further increases as restocking demand from power plants kicks in. 3) Upbeat on coal-fired power growth. The firm has 10,860MW of coal-fired power capacity in operation and 9,320MW under construction. We are optimistic about the incremental contribution once these projects come online.

Financials and valuation

We keep our 2026 and 2027 earnings forecasts largely unchanged. The stock is trading at 12.9x and 12.8x 2026e and 2027e P/E. We maintain our OUTPERFORM rating and target price, implying 14.2x and 14.1x 2026e and 2027e P/E, offering 10% upside.

Risks

Slower-than-expected progress in projects; higher-thanexpected supply; disappointing demand.