Low valuation and high flexibility market coal standard, with three bright spots, covering for the first time, giving a "buy" rating
The company has three bright spots: first, the company's coal business is market-oriented and has a certain proportion of chemical coal, resulting in large performance flexibility; second, the company's coal-chemical-transport industry chain integration to reduce costs; third, Hongdunzi Coal Mine Phase I and Phase II will be put into production in the second half of 2022 and 2023, with a total increase of 4.8 million tons in two years, with a considerable increase in coal mine production capacity. We predict that the company's net profit attributed to the parent company from 2022 to 2024 is 26.01 / 3.289 billion yuan, an increase of 29%, 15% and 10%, equivalent to 2.17 EPS 2.49 / 2.74 yuan per share, and the current share price corresponds to 4.2 PE 3.7max 3.3 times, covering the company for the first time and giving the company a "buy" rating.
Coal business: abundant coal reserves and rapid expansion of production capacity
At present, the company has recoverable reserves of about 1.2 billion tons. Two large and efficient mines in production are located in Ordos, Inner Mongolia, namely Gaojialiang Coal Mine with an annual output of 7.5 million tons and Hongqingliang Coal Mine with an annual output of 6 million tons. Hongdunzi Phase I (2.4 million tons / year) and Phase II (2.4 million tons / year) are expected to be put into production in 2022 and 2023, with a total production capacity of 18.3 million tons.
Coal business: flexible pricing of coal in the market, with excess returns in the upward cycle of coal prices.
The company's commercial coal is mainly sold at market price, and its performance is more flexible. About 70% of the sales structure is thermal coal, and the remaining 30% is chemical coal. The company's performance flexibility is reflected in two points: (1) the spot price ceiling of thermal coal is 1.5 times that of the annual long-term Association, so it has more profit space compared with the companies with higher share of the long-term Association. (2) Chemical coal has no spot price ceiling similar to that of thermal coal, which is more flexible, and the excess return in the upward cycle of coal price is more obvious.
Coal Chemical Industry and Railway Transportation: collaborative Construction of "Coal-Chemical-Transportation" Industry chain
The company's methanol production capacity is 400,000 tons / year, and all the 448000 tons of methanol produced by the company in 2021 are sold, with both production and marketing booming. However, due to the rapid rise in costs, overall, gross margin is still not good. The company's railway transport business operates steadily and profits remain stable.
Risk hints: (1) the risk of falling more than expected in coal prices; (2) the risk of production safety; (3) the risk of new production capacity falling short of the expected risk.