On September 23rd, Hong Kong-listed coal stocks collectively strengthened.

China Qinfa (00866.HK) rose by 8.7%, Power Development (01277.HK) increased by 7.35%, South Gobi (01878.HK) climbed by 4.33%, Yankuang Energy (01171.HK) gained 2.58%, China Coal Energy (01898.HK) went up by 2.81%, Yancoal Australia (03668.HK) and others followed suit.

In terms of news, Zhongtai Securities released a research report stating that due to the pressure of old-specification rebar and weakening demand in the off-season, the number of steel mills shutting down for maintenance has increased.

The overall coking steel industry weakened in August, but the peak season for September is approaching, and the inflection point for steel mills resuming production is imminent.

Advertisement

The daily output of pig iron is expected to stop falling and rise again, driving the price of coking coal to return to an upward trend.

At the same time, during the "Golden September and Silver October" period, the demand for chemical and building materials is expected to enter the peak season, and the price elasticity of high calorific value thermal coal is expected to stand out.

Changjiang Securities pointed out that with the eighth round of coke price cuts and the rebound of steel prices, the losses of coking plants have intensified while the profits of steel mills have improved.

The coke price has started to rise, driving market sentiment to warm up, and the double coke is expected to fluctuate and bottom out in the short term.

The bank continued to point out that at the current point, the coal sector, based on a healthy balance sheet, certain cash flow, and dividends, still has a prominent defensive attribute.

Amidst continuous positive news in the industry, Power Development has become the fastest-growing stock in the Hong Kong stock market's coal sector.

Today's trading once soared to HK$1.48, a historical high, with a cumulative increase of 2.74 times since the beginning of the year, and the total market value has risen to HK$12.308 billion.

Compared with giants such as China Shenhua and China Coal Energy with a market value of hundreds of billions, Power Development's overall strength is not outstanding, and its stock performance can be better than other coal concept stocks, which may be related to the continuous good news about itself recently.

First of all, Power Development has been included in the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect target securities, both effective from September 10, 2024.

The board of directors stated that this inclusion will help to expand the company's shareholder base and increase the circulation of share transactions, thereby enhancing the investment value of shares and the company's reputation in the capital market.

Secondly, in the first half of this year, Power Development achieved impressive performance.

In the first half of 2024, Power Development achieved a revenue of 25.32 billion yuan, a significant increase of 69.7% year-on-year; the net profit attributable to shareholders was 10.95 billion yuan, a year-on-year increase of 92.08%.

The company stated that this growth is mainly due to the group's Dafanpu coal mine returning to normal production levels, effectively overcoming the production obstacles of the same period last year.

In addition, Power Development is also actively laying out the future, with the Yong'an coal mine and Weiyi coal mine in the Ningxia Hui Autonomous Region currently under intensive construction.

Power Development expects that after these two coal mines are put into operation, they will significantly expand the group's coal production capacity and enrich the types of coal products, injecting new strong momentum into the company's future performance growth.

It is worth mentioning that Power Development has also taken an important step in its globalization strategy.

At the end of August, the company announced an investment of $90 million to subscribe for MC MINING (MC) shares, holding 51% of its shares, making MC officially a non-wholly-owned subsidiary of the company, and MC's financial performance will be consolidated into the accounts.

It is reported that MC has a total of 4 major projects and 27 mining rights, engaged in coal mine projects, with a loss of about $4.398 million for the year ended June 30 last year.

In this regard, Power Development pointed out that although the company recorded a certain loss last year, the company stated that this subscription is aimed at expanding the global business map, and the cooperation with MCMINING will bring significant synergies, jointly promoting the rapid development of both parties' businesses.

In addition, the recent continuous increase in the company's shares by the chairman of the board and executive director Ju Wenzhong has to some extent strengthened investors' confidence in Power Development's investment.