Morgan Stanley: Yankuang Energy Group (01171) second quarter preliminary results meet expectations, reiterates "overweight" rating.

Morgan Stanley released a research report stating that Yankuang Energy Group (01171) is expected to see a 53% increase in net profit to 7.2 billion yuan in the first half of 2026, which is in line with the bank's expectation of 7.16 billion yuan. After excluding non-recurring gains and losses, the company's operating profit in the first half of the year is expected to increase by 2% to 4.5 billion yuan. This means that the net profit for the second quarter is expected to increase by 74% to 3.2 billion yuan. Morgan Stanley reiterated its "overweight" rating on Yankuang Energy Group, with an H-share target price maintained at 15.6 Hong Kong dollars. The bank pointed out that the company's performance in the first half of the year was strong, mainly due to the relatively high coal prices supported by resilient demand, the increase in coal chemical prices due to the conflict in the Middle East, and the higher investment income from the disposal of 100% equity in Inner Mongolia Xintai Coal. Recently, the price of thermal coal has been supported in the short term due to potential increase in daily consumption by power plants after rainfall in many areas and the release of demand for replenishing coal stocks. At the same time, the tightening of safety inspections following a coal mine accident in late May has limited the supply in major coal-producing provinces such as Shanxi, which is expected to support the price of coking coal. The strong coal prices and coal chemical profits will continue to bring resilient profit performance to Yankuang Energy Group.