Main points of investment:
Raise the profit forecast and target price, increase the rating. The company issued a performance forecast for 2021, realizing net profit of 1.91 billion to 2.06 billion (year-on-year increase of 1.86 billion to 20.01 billion) and deducting non-net profit of 1.91 billion to 2.03 billion (year-on-year increase of 2.01 billion to 2.06 billion). Spot sales and rising coal prices are the main reasons for the company's performance growth. It is expected that coal prices will still be in the high center in 2022, raising EPS to 1.67,1.38,1.59 yuan (formerly 1.18,1.28,1.47) yuan in 2021. According to the industry, the average 8xPE will be given in 2022, raising the target price to 11.04 yuan (formerly 8.77 yuan) and maintaining the overweight rating.
Benefit from the market coal sales, Q4 performance improved month-on-month. The company's Q4 returned home net profit of 62m to 770m, the performance center increased by 5.9% compared with the same period last year, and turned losses into profits by 750 million compared with the same period of 20Q4. In view of the fact that the net profit of Q4 from 2018 to 2020 is negative, which is-1.6,3.4 and-60 million respectively, the company usually provides for part of the costs, expenses and impairment in the fourth quarter, so the month-on-month increase in 21Q4 performance also proves the high performance flexibility of companies selling coal in the market under the circumstances of guaranteed supply and higher coal prices.
With the completion of Hongqingliang mine documents, the output of 2022 is expected to increase. The production capacity of Hongqingliang Coal Mine is 6 million tons, accounting for 44% of the total production capacity. Due to the lack of approval of the safety production license of the mine, the utilization rate of the company's coal production capacity in 2018-2020 was 78%, 95% and 90% respectively, which did not reach full production. According to the company announcement (2021-064), the mine obtained a safety production license at the end of 2021. The company is expected to be fully productive in 2022.
Hongdunzi Coal Mine provides sustainable growth. The total production capacity of Hongdunzi Coal Mine is 6.6 million tons, accounting for 49% of the company's production capacity at the end of 2021. Among them, Hongyi and Hong2 coal mines under construction (both 2.4 million tons and 60% rights and interests) are expected to be put into production in 2022 and 2023, respectively. If calculated at 480 yuan / ton coal price, it is expected to contribute 470 million of the return net profit in 2025, equivalent to 23.7% of the performance center in 2021.
Risk hint. Coal prices fell more than expected; production progress of projects under construction was lower than expected.