Daiwa believes that because the year-on-year growth of production in May 2024 is 2.3%, the market has already digested this target, as its indication is poor.
Zhongguo Shenhua (01088) is rated as "hold" by Daiwa in its research report, because its coal sales and average selling price have both declined, and the company's valuation is high.
The bank pointed out that the group's total coal production in May was 27.4 million tons, a year-on-year increase of 1.9%, and the sales volume of electricity increased by 4.4% to 15.3 billion kWh. Although the positive growth in coal production in May exceeded the 2.6% reduction guidance from management at the beginning of this year, the bank believes that the market has already digested this target, as its indication is poor because the year-on-year growth of production in May 2024 is 2.3%.
The bank expects that these data, combined with the recent re-evaluation of the long-term expected returns of assets in various parts of mainland China, will provide support for the group's stock price before the ex-dividend date on June 28.