A worker at a mining site of Mong Duong Coal. (Photo: vinacomin.vn) Datacompiled by Vinacomin - Minerals Holding Corporation (UPCoM: KSV) showed thatin the last quarter, raw coal output was 10.58 million tonnes, reaching 27.1 percentof the year plan and equaling 106 percent of last year's production. Meanwhile,its coal consumption reached 11.07 million tonnes, equal to 25.7 percent of theannual plan and up 12.4 percent year-on-year.
Duringthe economic recovery post-COVID-19 pandemic, domestic demand for coal is at ahigh level, especially coal for power generation. Coal-fired power isaccounting for more than 30 percent of the country's total power capacity andplays an important role in ensuring national energy security. It is also one ofthe main sources of power supply to meet the needs of economic development andmaintain the stable operation of the system.
Rising coal prices
Moreover,domestic coal prices are expected to soon be adjusted, increasing profitmargins for businesses. According to Viet Capital Securities Company (VCSC),the domestic coal price is currently at a modest level compared to theinternational coal price. At present, international prices were 2.5-3 timeshigher than domestic prices and may continue to increase.
RystadEnergy, an independent energy research agency, said that if sanctions on coalwith Russia eventuate or there is a physical disruption to Russian rail/port transportation,then there will not be a cap on coal prices.
Addingto the supply concerns, Australia recently declared a national emergency inresponse to devastating floods along the East coast, affecting coal-producingregions of this country. Rystad Energy predicts coal prices may surpass 500 USDper tonne this year.
Meanwhile,experts of VCSC forecast that TKV may ask to raise coal prices in 2022, asdomestic coal prices have remained stable over the past two years despiterising production costs.
Withthe domestic coal production capacity of 100 percent, coal production isexpected to reach 41 million tonnes this year, up 2 percent on-year. ThereforeTKV has to import coal from other markets. And as international coal priceshave continuously inched higher, it is not economical for TKV to maintain thecoal prices since 2021.
SacombankSecurities Joint Stock Company (SBS) said that listed coal mining companies canalso benefit from negotiating new selling prices for TKV this year.
Toproduce coal for power generation and benefit from the cost, businesses areconcentrating their resources, preventing production disruptions. They alsohave to mobilise the workforce and equipment to organise coal mining, increasecoal production, process and mix coal, ensuring coal output for consumptiondemand.
Bullish business results
Thanksto that, a number of coal mining companies reported outstanding production andbusiness results in the first quarter of 2022. For Nui Beo Coal JSC (HNX: NBC),under Vinacomin, coal consumption reached 545,000 tonnes, exceeding 30 percentof the quarterly plan, while its revenue was 826 billion VND, exceeding 34 percentof the quarter plan.
HaTu Coal JSC (HNX: THT), another company under Vinacomin, produced 370,000tonnes of raw coal, reaching over 29 percent of the year plan, while coalconsumption was approximately 70,000 tonnes, reaching over 25 percent of theyear plan. The coal miner posted revenue of 1 trillion VND, equal to 26.3 percentof the five-year plan, with profit of over 10 billion VND, reaching 33 percentof the year plan.
MongDuong Coal JSC (HNX: MDC), under Vinacomin, said that its coal production inthe first quarter reached 325,000 tonnes, 21.3 percent of the year plan. Itconsumed 340,000 tonnes, reaching 22.3 percent of the year plan.
Onthe stock market, coal stocks extended recent rallies with MDC up 4.84 percentto 13,000 VND per share at 2.45pm (local time), while THT rose 5.07 percent to 14,500VND a share, NBC climbed by 6 percent to 15,900 VND per share.
LeXuan, a senior trader, said that coal stocks witnessed extraordinaryperformance in the last four to five sessions as they traded contrary to themarket's downside trend.
"Itis thanks to higher domestic coal demand post-COVID-19, rising inflation,the conflict between Russia and Ukraine, and news about Chinareducing coal import tariffs to zero starting from May," Xuan added.
"However,I think investors need to pay attention to liquidity when trading these stocks,since coal stocks' trading volume is quite low.
"Moreover,the industry has fewer rally waves than others, so investors need to bepatient.
"Theindustry's business results are not so impressive with low price to book(P/B) ratio and price to earning (P/E) ration due to low earning per share(EPS) ratio."/.
VNA
