CICC has kept its 2026 earnings forecast for SHOUGANG RES (00639) largely unchanged while introducing a 2027 earnings projection of HK$1.025 billion. The current share price implies 2026/2027 price-to-earnings ratios of 16.3x and 15.6x, respectively. The firm reaffirmed its Outperform rating, noting that the company's resource extraction lifespan may exceed previous expectations, which could enhance the valuation of its core coal assets. Consequently, CICC raised its target price by 13% to HK$3.40, implying 2026/2027 P/E ratios of 17.7x and 16.9x and suggesting an 8% upside potential.
SHOUGANG RES reported its 2025 financial results, with attributable net profit declining 58% year-on-year to HK$632 million, equivalent to earnings per share of HK$0.12. Second-half 2025 net profit stood at HK$228 million, down 65% year-on-year and 43% sequentially, falling short of CICC's expectations. The underperformance was attributed to a higher proportion of high-sulfur coal output and a lower washing recovery rate, leading to coal selling prices below expectations and costs above forecasts.
Amid escalating tensions in the Middle East, global oil and gas prices have risen significantly. The company has publicly stated that, based on domestic resource assessment standards and new coal mining technologies, the extraction lifespan of its existing coal resources is expected to be further extended. Although coking coal prices have not yet directly reflected the tightening energy supply-demand balance, CICC anticipates that constrained supply and rising prices of raw materials such as diesel may push up the global coking coal cost curve, providing solid support for coking coal prices. The firm remains optimistic about the resilience of SHOUGANG RES's coking coal selling prices.
As of the end of 2025, the company held approximately HK$7.995 billion in available free cash, compared to HK$9.196 billion in 2024. It plans to distribute a final dividend of HK$0.06 per share, in addition to an interim dividend of HK$0.06 per share, implying a full-year 2025 dividend payout ratio of around 97%.