Damo: China Shenhua (01088)'s preliminary results for the second quarter exceeded expectations and reaffirmed the “gain” rating

The Zhitong Finance App learned that Morgan Stanley released a research report saying that China's Shenhua (01088) expects net profit to increase 7% to 21% year-on-year in the first half of 2026, reaching 26.3 billion to 29.8 billion yuan, which is superior to the bank's forecast of 26 billion yuan. This means that its net profit for the second quarter will be between 15.6 billion yuan and 19.1 billion yuan, up 23% to 51% year over year, better than expected. After merging the 11 assets injected by the Group, the year-on-year change in net profit for the first half of the year is expected to be between a 4.7% drop and an 8% increase based on the restated scale. Morgan Stanley reiterated its “gain” rating on China's Shenhua, and the target price for H shares remained unchanged at HK$48.3.

The bank pointed out that the company's initial performance was good, mainly reflecting the same relatively high coal prices (especially in the second quarter), as well as an increase in profit contributions from the coal chemical, railway and port businesses. Although coal prices have recently recovered due to falling daily power plant consumption and high port inventories due to rainfall in many places, as the rainy season ends, the peak daily consumption and the release of demand for power plant restocking, and supply still limited in major coal-producing provinces, will continue to support thermal coal prices. It is expected that Shenhua's profit in the third quarter will remain steady.