According to a report from Caixin, on December 31 (Reporter Liu Yue), this year's A-share trading has concluded, and the Coal Sector has performed remarkably. Data from Choice shows that the CSI SWS Coal Index (802015.EI) has increased by over 18% for the year, with China Shenhua Energy (601088.SH) seeing its stock price rise nearly 50% and a total market cap exceeding 860 billion yuan. Looking back, from 2019 to 2024, the coal index has recorded annual gains for six consecutive years, earning it the title of 'Stable Happiness.'

Despite a gradual decline in coal price since 2023, resulting in a general profit drop among coal companies, the strength of the Coal Sector remains unshaken, with the coal index rising over 18% last year and this year. High dividends may be one of the driving factors, as data from Founder Securities shows that the Coal Sector boasts an average dividend yield of 5.6% over the last 12 months, far exceeding that of Banks, Outfits, and Home Appliances sectors.

Looking ahead to 2025, the industry generally believes that next year Thermal Coal supply and demand will be strong, with prices fluctuating within a range.

High dividend Coal stocks are favored by investors.

Since 2024, the structural short supply of Thermal Coal has gradually eased, and coal prices have faced downward fluctuations, with the range of price increases and decreases narrowing. Affected by the drop in coal prices, during the first three quarters of this year, the performance of the 'Four Kings of Coal'—China Shenhua, Shaanxi Coal Industry (601225.SH), China Coal Energy (601898.SH), and YANKUANG ENERGY (600188.SH)—generally declined. In terms of revenue, except for a slight year-on-year increase for China Shenhua, the other three coal giants all saw revenue decline year-on-year; regarding net income attributable to shareholders, the four giants experienced decreases of 4.5%, 1.46%, 12.4%, and 26.98% respectively.

Despite the gradual decline in coal price since 2023 and the general drop in profits for coal enterprises, the listed coal companies still provide investors with relatively high dividend returns. Citing Wind data, Founder Securities reports that of the 36 listed companies in the A-share Coal Sector, in 2023, except for China Coal Xinji Energy (601918.SH) which had a dividend payout ratio below 30%, all other 35 companies had a payout ratio exceeding 30%; the top three in terms of payout ratio are Guanghui Energy (600256.SH), Guizhou Panjiang Refined Coal (600395.SH), and China Shenhua, with ratios of 87.9%, 82.1%, and 75.2% respectively.

In the current environment of increasing market volatility, stable dividend returns have become highly appealing to investors. Founder Securities analyst Jin Ning pointed out in a recent article that as of the market close on December 10 of this year, the dividend yield of the Coal Sector ranks first across the industry, with an average yield over the last 12 months reaching 5.6%, surpassing that of Banks, Outfits, and Home Appliances sectors.

It is worth noting that the Coal Sector is also receiving favorable policies. The State-owned Assets Supervision and Administration Commission of the State Council has included market cap management in the performance evaluation of central enterprise leaders. Analysts believe that the emphasis on market cap management by central state-owned enterprises will increase, and high dividend assets are even more valuable under weak demand. Regarding the market cap management plan, China Shenhua Energy stated during institutional research that the company closely monitors its market cap and has initially established a unique "11257" market cap management system. It effectively oversees the three key processes of value creation, value operation, and value delivery, striving to promote the alignment of the company's intrinsic value with market value.

In addition, the recent Share Buyback policy and increased loan policy from the central bank have officially been implemented. Jin Ning stated that the Coal Sector generally has high dividends, and some companies currently maintain a dividend yield of 6%-8%. For enterprises, a loan interest rate of 2.25% is generally lower than the dividend yield, which motivates major shareholders and listed companies to promote buybacks and increases, thereby driving up stock prices and realizing a reassessment of the Coal Sector's value.

In 2025, Thermal Coal prices will fluctuate within a Range.

So far this year, Coal production has shown a "low first, high last" trend, but inventory levels in the mid and downstream sectors remain high. The seasonal characteristics of Thermal Coal are not evident, and imports of Coal continue to grow this year, with overall supply and demand stability being relatively high.

In terms of demand, the demand for electricity Coal is "not strong in peak season." Influenced by good hydropower output, Coal prices during this summer peak season are performing poorly. Regarding winter stockpiling of Coal, Zhang Wenwen, an Analyst from Shanghai Ganglian E-Commerce Holdings' Coal and Coke Division, told reporters that the high inventory situation at ports and power plants suppresses the rise of Coal prices, and the increment in market Coal demand is limited.

Looking ahead to 2025, opinions in the industry on the trend of Coal prices vary, but it is generally believed that Thermal Coal prices will fluctuate within a Range. Mysteel's annual report points out that next year, the focus of Thermal Coal prices may slightly rise. As the economy develops comprehensively, Coal prices will still have bottom support, but the room for stable supply increase is limited; additionally, with continuous policy adjustments, the economy and market will experience more changes. Under the premise of growing demand for thermal power, Thermal Coal prices will rebound periodically, remaining in a narrow fluctuation range with a slight upward trend in price focus throughout the year.

Jin Ning uses the average price of Qin Port in the second half of 2024 (approximately 844 yuan/ton) as a reference, projecting that under neutral conditions, the price of Coal in 2025 will be around 840 yuan/ton; under pessimistic conditions, Coal prices will drop to the long-term contract price range of 770 yuan/ton; under optimistic conditions, Coal prices are expected to rise, with an average price maintained near 950 yuan/ton.

It is worth noting that the substitution of clean energy for Coal is gradually increasing. However, industry insiders point out that although the proportion of wind and solar power in the energy structure is continuously rising, its development increasingly relies on the regulation ability of the large power grid and the stability of power sources. Despite the controversy surrounding Coal power due to high carbon emissions, the stability of its power generation quality cannot be ignored. Within the current structure of the large power grid, Coal power plays a crucial role in ensuring the security and stability of the grid. Therefore, looking ahead, the scarcity of Coal power assets may become more pronounced. YANKUANG ENERGY also stated that with the effectiveness of a series of measures to expand domestic demand and stabilize growth, such as large-scale equipment upgrades and the old-for-new replacement of consumer goods, the role of Coal as a primary energy source and a safety net is becoming more prominent.