J.P. Morgan Maintains Seacoal Energy Overweight Rating, Target Price 26 RMB

Overview

This research report analyzes Seacoal Energy's Q1 2026 performance. Despite operating profit falling below expectations in Q1, J.P. Morgan maintains its Overweight rating with a target price of 26 RMB.

Core views

Seacoal Energy's Q1 operating profit decreased by 13%, mainly due to the disposal of methanol business last year and declining LNG terminal profitability. Although performance is under pressure in the short term, J.P. Morgan believes these impacts are temporary, and performance is expected to recover gradually starting from Q3. New LNG contracts will take effect in June, expected to increase revenue from Q3 onwards. Furthermore, although a high hedging ratio temporarily affected trading profits, this ratio is expected to decrease gradually, improving sensitivity to natural gas price fluctuations.

Analysis framework

J.P. Morgan evaluated Seacoal Energy's short-term and long-term performance prospects by analyzing its quarterly earnings reports combined with market trends and company operations. The report notes that while current high LNG prices have led to reduced terminal processing volumes, new LNG contract effectiveness and decreasing hedging ratios will help improve future performance.

Methodology notes

• Company Fundamentals and Financial Framework

  Corporate Performance Analysis

  Evaluate profitability and operational status through analysis of corporate financial data

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Seacoal Energy (600803.SS)

  Benefiting from the rise in global LNG prices

  Strengths

  Possesses upstream LNG resources, potential for higher trading profits

  Weaknesses

  Q1 operating profit decreased by 13%

  Comparison

  Compared to peer companies, Seacoal Energy has an advantage in LNG trading

  Risks

  Sales volume and profit margin underperforming

Key data

• Q1 Operating ProfitDecreased 13%YoY
• Target Price26.00RMB
• Current Stock Price20.26RMB

Impact & implications

J.P. Morgan believes Seacoal Energy will benefit from rising global LNG prices. Although performance faces pressure in the short term, performance is expected to improve in the second half. New LNG contract effectiveness and decreasing hedging ratios will help improve future performance. However, main risks include sales volume and profit margin underperforming.

Risks

• Sales volume and profit margin underperforming
• LNG terminal utilization below expectations
• Engineering business performance underwhelming

What to watch

• New LNG contract execution
• LNG price trend
• Procurement cost changes