Coal stocks on an upswing thanks to rising prices

July 06, 2021 - 09:35
The sharp increase in raw material coal price has pushed coal stock prices up simultaneously in June this year.


Workers in an underground coal mine of Núi Béo Coal JSC in the northern province of Quảng Ninh. In June alone, NBC shares of Núi Béo Coal JSC traded on HNX soared by more than 111 per cent compared to the previous month. Photo

HÀ NỘI The sharp increase in the price of raw coal has pushed coal stock prices up in June this year.

In June alone, NBC shares of Núi Béo Coal JSC traded on HNX soared by more than 111 per cent compared to the previous month. There were many sessions in which NBC reached ceiling prices with strong increase in liquidity.

In the trading session on June 18, NBC suddenly attracted cash flow with the liquidity nearly doubling compared to the previous trading sessions. At the end of the session, NBC hit the ceiling price with an increase of 9.89 per cent compared to the previous session. It became a historic session for NBC as the market price exceeded the par value after 6 years of trading below VNĐ10,000 (US$0.4) per share. Currently, NBC is trading around VNĐ14,500 per share.

TDN shares of Vinacomin-DeoNai Coal JSC also had an impressive recovery in June as they increased by more than 63 per cent compared to May. TDN surpassed par value in the recent session on June 28 and is currently trading around VNĐ10,500 per share.

Other stocks in the coal industry also recorded an upswing in June such as TVD shares of Vàng Danh Coal JSC, up by 57 per cent, MDC of Mông Dương Coal JSC rising by 46 per cent, THT of Hà Tu Coal JSC up by 36 per cent, TC6 of Cọc Sáu Coal JSC up by 45 per cent.

Currently there are 13 coal stocks listed on the Hà Nội Stock Exchange (HNX) with the State shareholder being the Việt Nam Coal and Mineral Industries Group (TKV) owning over 50 per cent of capital. Notably in June, six out of 13 coal stocks have exceeded par value after many years of trading at low levels.

If at the end of May, the stock market prices of many coal stocks were still around just VNĐ5,000-7,000 per share, now most of them have risen to over VNĐ10,000 per share.

In a recent report, Yuanta Securities Vietnam attributed the strong increase in stock prices to the rising material coal prices, saying that the world coal price had surpassed the level of $120 per tonne, the highest since October 2011, due to supply constraints and a sharp increase in demand.

Coal demand was increasing strongly in Asian countries such as China, Japan and South Korea. Coal prices soared nearly 44 per cent compared to the beginning of 2021, the company said.

According to analysts, the upward trend in coal prices will continue at least till the end of 2021, due to strong demand from steel producers in China and many other countries after the pandemic.

Previously, the declining coal prices on a global scale combined with dwindling reserves and a large annual welfare fund for employees made coal stocks gradually lost their attractiveness to investors.

However, according to experts, investors need to be cautious when trading some coal stocks with rapid increases as the general outlook of the mining industry is still considered average in 2021. In fact, in the first trading sessions of July, profit-taking pressure increased causing most coal stocks to plummet, some stocks even fell to the floor prices.

In terms of long-term investment, in addition to the wave of coal price increase, a plus point of coal stocks is that coal companies are paying annual dividends regularly. Some businesses even pay cash dividends of up to VNĐ2,000-3,500 per share.

Therefore, despite previous low market price and liquidity, coal stocks still attracted long-term investors. This year from May to July, coal enterprises begin to execute their 2020 dividend payment plan. VNS