3Q26 results miss our expectations

China Coal announced its 3Q26 results. Net profit attributable to shareholders fell 3.8% YoY but rose 6.8% QoQ to Rmb4.60bn for A-shares, and rose 22% YoY and 8.4% QoQ to Rmb4.69bn for H-shares. Recurring net profit attributable to shareholders fell 3.1% YoY and 2.3% QoQ to Rmb4.59bn for A-shares. The 3Q26 results came in below our expectations, mainly reflecting higherthan- expected coal production costs.

1) Coal output fell. In 3Q26, commercial coal output and selfproduced coal sales volume were 31.43mnt and 32.17mnt, down 8.2% and 6.3% YoY, and down 1.1% and up 1.4% QoQ.

2) Coal prices rose. In 3Q26, the selling price of self-produced coal rose 29% YoY and 13% QoQ to Rmb620/t. Thermal coal prices rose 25% YoY and 6.1% QoQ, while coking coal prices rose 47% YoY and 40% QoQ.

3) The cost of self-produced coal rose. On an A-share reporting basis, the per-tonne cost of self-produced coal sold rose 31% YoY and 11% QoQ to Rmb323/t in 3Q26; excluding freight, the per-tonne cost rose 35% YoY and 14% QoQ to Rmb258/t. Heightened safety oversight and geological issues curtailed output and raised maintenance spending, driving a sharp increase in unit production costs.

4) Chemical profit remained high but declined QoQ. In 3Q26, sales volume of major chemicals rose 4.8% YoY and 5.4% QoQ. Polyethylene prices rose 2.4% QoQ, while polypropylene, urea, and methanol prices fell 2.1%, 3.3%, and 2.0%, respectively; costs rose 7.5%, 7.7%, 15%, and 5.6% QoQ, respectively. Chemical gross profit fell 16% QoQ to Rmb1.25bn on higher raw material costs.

Trends to watch

High coal prices support earnings growth. In 4Q26 (as of October 23, 2026), the spot price of Qinhuangdao 5,500 kcal/kg thermal coal rose 33% YoY and 16% QoQ, while the price of 1/3 coking coal at Jingtang Port rose 49% YoY and 11% QoQ. Looking ahead, we believe domestic supply may improve marginally with policy support, while overseas supply remains constrained. Energy prices may also stay elevated, with heatingseason demand relatively inelastic. Although the firm’s coal production has been somewhat disrupted, high coal prices should continue to support its earnings growth.

Financials and valuation

We leave our 2026 and 2027 earnings forecasts for both Ashares and H-shares largely unchanged. The A-shares are trading at 10.6x 2026e and 9.9x 2027e P/E, and the H-shares at 6.2x 2026e and 5.6x 2027e P/E. We maintain our OUTPERFORM rating and target price of Rmb19.00 for the Ashares, implying 13.9x 2026e and 13.0x 2027e P/E and offering 30% upside. As the H-share dividend yield becomes less attractive, we cut our H-share target price by 13% to HK$13.00, implying 8.5x 2026e and 7.7x 2027e P/E and offering 37% upside.

Risks

Weaker-than-expected demand recovery; sharper-thanexpected supply expansion.