JPMorgan has released a research report indicating that thermal coal prices in mainland China have climbed 14% since the start of the third quarter, with coal stocks rallying between 16% and 22% over the same period, reflecting market expectations of a "higher for longer" pricing environment. The bank believes that short-term coal prices face further upside risks, driven mainly by constrained domestic supply and restocking demand, and has consequently raised its 2026 thermal coal price forecast from RMB 805 per tonne to RMB 830 per tonne.

Factoring in elevated unit costs, JPMorgan has adjusted its 2026 to 2028 earnings projections for China Shenhua (ASX: 01088) and Yankuang Energy (ASX: 01171), with changes ranging from a 2% downgrade to a 4% upgrade. For China Shenhua, the bank has lifted its A-share target price from RMB 45 to RMB 47 and its H-share target from HK$44.5 to HK$46, while retaining a "neutral" rating. Meanwhile, Yankuang Energy (ASX: 600188) sees its A-share target price raised from RMB 20 to RMB 22, with the H-share target held steady at HK$12.5, also maintaining a "neutral" stance.

The bank expresses a short-term preference for Yankuang Energy, citing its higher coking coal exposure and advantageous contract portfolio. While JPMorgan acknowledges that dividend yields of 6% to 7% across coal stocks are attractive, it cautions that such high yields may not be sustainable, as supply constraints could prove transient in nature.