Founder: The energy crisis continues to unfold, and the rigidity of coal supply and demand is greater compared to oil.

Founder released a research report stating that geopolitics often lead to an increase in energy prices, with coal-oil ratios showing an upward trend. This is mainly because most countries have well-established crude oil reserves, and coal's main function is for electricity demand which is more rigid, making the supply and demand for coal more rigid compared to crude oil. If the current US-Iran conflict is eased and the blockade of the strait is short-lived, the potential for coal price increases is relatively limited; if the blockade lasts longer, or even becomes normalized, the overall center of coal prices will move upwards, further consolidating its position as a cornerstone of energy supply. As the energy crisis continues to evolve, the demand for alternatives to coal is growing, improving the supply and demand dynamics of coal, and enterprises with strong coal price elasticity are expected to benefit first. Founder's main points are as follows: Looking back at history, the Iran-Iraq War, the Arab Spring of 2011, and the 2022 Russia-Ukraine conflict have all led to varying degrees of increase in energy prices. For example, the outbreak of the Iran-Iraq War in 1980 led to a significant increase in oil and gas prices, with oil prices rising by over 200% and international coal prices by 61%; during the Arab Spring of 2011, energy prices surged, with ARA coal prices surpassing $131 per ton at one point. Most recently, the 2022 Russia-Ukraine conflict saw Europe's electricity demand soar due to Russia being a major supplier of coal and gas, leading to soaring natural gas and thermal coal prices, with thermal coal breaking the $400 per ton mark. The transmission of oil and gas prices to coal is mainly through two channels: coal chemical industry and electricity generation. In terms of coal/oil ratios, the current ratio of Australian coal price to Brent crude oil price is around 1.66, placing it at the historical 56th percentile. Geopolitics often lead to an increase in energy prices, and both coal-oil ratios show an upward trend, mainly because most countries have well-established crude oil reserves, and coal's main function in electricity demand is more rigid, making the supply and demand for coal more rigid compared to crude oil. Taking the coal chemical industry as an example: using olefins as a reference, with Brent crude oil at $60 per barrel, the corresponding cost of olefins is around 6800-6900 yuan per ton, close to the cost of 5500K778 yuan per ton of coal. Currently, as crude oil prices approach $90 per barrel, coal prices are still low. Using electricity generation as an example: currently LNG ships are blocked in the strait, and Qatar accounts for about 20% of global LNG exports. If LNG ships cannot sail, it may cause a global shortage of LNG in the future. The increase in coal prices during the 2022 Russia-Ukraine conflict was driven by the demand for electricity generation. While the initial rise in coal prices was due to Europe banning Russian coal, and there not being much Iranian coal, causing coal prices to remain stable at the beginning of the conflict, as the conflict continues, there is a high possibility of shortages in oil, gas, and coal, leading to rapid price increases. If the current US-Iran conflict is eased and the blockade of the strait is short-lived, the potential for coal price increases is relatively limited; if the blockade lasts longer, or even becomes normalized, the overall center of coal prices will move upwards, further consolidating its position as a cornerstone of energy supply. Investment Recommendations: Investment logic one: as the energy crisis continues to evolve, the demand for alternatives to coal is growing, improving the supply and demand dynamics of coal, and enterprises with strong coal price elasticity are expected to benefit first. Recommended focus: Yankuang Energy Group (600188.SH), Jinneng Holding Shanxi Coal Industry (601001.SH), Shanxi Coal International Energy Group (600546.SH). Investment logic two: in the case of high oil and gas prices, focus on investing in companies in coal chemical industry, as their profits from the chemical sector are expected to increase, enhancing the company's performance. recommended focus: Yankuang Energy Group, China Coal Energy (601898.SH), China Shenhua Energy (601088.SH), Huaibei Mining Holdings (600985.SH). Risk warning: Risk of safety production, risk of international situation changes, risk of macroeconomic fluctuations, risk of large fluctuations in commodity prices, risk of project construction progress falling short of expectations, risk of policy support falling short of expectations, risk of intensified market competition.