Daily Investment Strategy
Daily focus：China Shenhua（1088）
The company's net profit for the first half of 2025 is about RMB2.56bn to RMB2.76bn, down 15.8% to 21.9% from the same period last year, mainly due to the decline in coal prices and sales, reflecting market supply and demand pressures. Coal production and sales fell slightly by 1.7% and 10.9% respectively, and power generation also decreased by about 7%. The cost of coal production in the second quarter improved due to labor and material cost control, and the unit cost remained below RMB300/ton, which is the company's competitive advantage. The price of thermal coal fell more than expected in the first half of the year and began to rebound in July due to rising temperatures. It is expected that increased demand and reduced imported coal will support prices in the second half of the year but may face pressure after the summer peak. The fulfillment rate of long-term contracts is higher than required, and the long-term contract price of thermal coal in July was RMB666/ton. The power sector's profits declined due to the decline in coal prices and utilization, showing the challenges of diversified operations. The management pays attention to cost management and policy changes. It is expected that the long-term contract policy may be adjusted in 2026. Shenhua is expected to maintain its market competitiveness with its low-cost advantage and stable operation.
China's export and social financing data both beat expectations
China's June export data significantly exceeded expectations, growing 5.8% year-on-year, outperforming the market forecast of 5%. Exports to ASEAN and EU markets also maintained strong growth momentum. Meanwhile, total social financing increased by RMB 4.2 trillion in a single month, reflecting policy-level efforts to actively guide credit flows toward the real economy, with new bank loans far exceeding expectations. The dual positive factors of exports and credit indicate synchronized improvement in external demand and funding conditions, helping to alleviate weak domestic demand pressures and providing support for economic growth in the second half of the year. China's second-quarter GDP growth data will be released today.
On Monday, the Southbound Stock Connect recorded a net inflow of HKD 8.2 billion. Among the stocks, Meituan (3690) saw the highest net inflow, reaching HKD 1.22 billion, followed by Alibaba (9988). On the other hand, Lao Feng Xiang (6181) recorded the largest net outflow of HKD 365 million, followed by Health Way (2587).
Leung Kai Tong is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to: https://apps.sfc.https://apps.sfc.hk/publicregWeb/indi/ADU276/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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