Tuesday 6th December 2022 Font size:

China Coal Companies Rise After Posting Higher Profits

Thursday, April 28th, 2022

Shares of coal companies China Shenhua Energy Co. and China Coal Energy Co. rose in early trade after first-quarter profits jumped substantially thanks to higher coal prices.

China Shenhua rose as much as 5.8% in Hong Kong on Thursday morning after it posted a 67% surge in first-quarter net profit. In China, its A-shares climbed as much as 7.4%.

The energy company said coal prices in the first quarter averaged 742 yuan ($113.10) a metric ton, up 25% from a year earlier. It expects coal prices “to fluctuate within a reasonable range” going forward as regulators move to bring supply and demand “towards a general balance,” it added.

China Coal Energy shares gained as much as 5.3% in Hong Kong following a 93% rise in its first-quarter net profit, which it said was supported by higher coal production. The company’s A-shares in China rose as much as 8.3% in early trading.

Citi analysts kept buy ratings on both companies following the results, with a HK$27.50 target price on H-shares of China Shenhua and a HK$8.30 target price on China Coal Energy.

The analysts said in a note that they expect demand for coal in China to remain strong, as the country still relies on the fuel as its main energy source, despite de-carbonization efforts.

“Chinese domestic coal prices have also remained at a significant premium over seaborne thermal coal prices over the last year,” they said.

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