Results Review

3Q25 results beat our expectations

China Coal announced its 3Q25 results: China Coal A-sharesand H-shares net profit attributable to shareholders fell 1.0%and 22% YoY but rose 28% and 16% QoQ to Rmb4.78bn andRmb3.86bn. A-share recurring net profit attributable toshareholders fell 0.7% YoY but rose 28% QoQ to Rmb4.74bn.

The 3Q25 earnings beat our expectations, mainly due to betterthan-expected cost control.

1) Overall coal production and sales volume remainedstable in 3Q25. Commercial coal output was 34.24mnt (-4.4%YoY, +0.7% QoQ), while self-produced coal sales volumereached 34.34mnt (+0.4% YoY, -0.3% QoQ).

2) Coal prices recovered QoQ. The average selling price ofself-produced coal was Rmb482/t (-12% YoY, +7.3% QoQ).

Thermal coal prices declined 9.4% YoY but rose 5.4% QoQ,while coking coal prices fell 16% YoY but increased 18% QoQ.

3) The cost control of self-produced coal improved. On anA-share basis, cost per tonne sold fell 9.9% YoY and 3.6% QoQto Rmb247. Excluding freight, cost per tonne declined 10% YoYand 4.9% QoQ to Rmb192, mainly due to lower safety andmaintenance fees.

4) The chemical business profitability strengthened. Salesprices for polyethylene, polypropylene, urea, methanol, andammonium nitrate fell 1.9%, 3.6%, 4.6%, 0.7% and 14% QoQ.

Combined chemical output rose 28% YoY and 4.5% QoQ, whilesales volume increased 29% YoY but fell 0.1% QoQ, reflectingprior-year maintenance suspensions. Lower coal costssupported a 54% QoQ increase in chemical gross profit toRmb695mn.

Trends to watch

Recovering coal prices are bolstering earningsimprovement. In 4Q25 (as of October 24), spot coal prices for Qinhuangdao 5,500kCal fell 11% YoY but rose 10% QoQ, while1/3 coking coal prices at Jingtang Port declined 12% YoY butrose 11% QoQ.

Looking ahead, we expect coal prices to remain elevated in4Q25, supported by the upcoming thermal coal peak seasonand constrained supply growth, which should further support therecovery in the firm’s coal profitability.

Financials and valuation

We raise our 2025 and 2026 earnings forecasts 4% and 6% toRmb16.9bn and Rmb18.8bn for A-shares and 4% and 5% toRmb16.1bn and Rmb18.0bn for H-shares due to adjustments inassumptions such as costs. A-shares are trading at 10.8x and9.7x 2025e and 2026e P/E, and the H-shares at 8.4x and 7.4x2025e and 2026e P/E. Maintain OUTPERFORM. Consideringupward earnings forecasts revisions and relatively attractive Hsharedividends, we raise our A-share and H-share TPs 7% and9% to Rmb15 and HK$12, implying 11.8x and 10.6x 2025e and2026e P/E for A-shares, offering 9% upside, and 9.1x and 8.0x2025e and 2026e P/E for H-shares, offering 8% upside.

Risks

Weaker-than-expected demand recovery; sharper-thanexpectedsupply expansion.