Comments: on July 13, 2022, the company issued a half-year performance forecast for 2022, saying that the net profit for the first half of the year is expected to be about 1.943 billion yuan to 2.223 billion yuan, an increase of 41.31% to 61.67% over the same period last year; the net profit after deduction is expected to be 1.938 billion yuan to 2.218 billion yuan, an increase of 41.54% and 62.00% over the same period last year.
22Q2 Huajin contributed considerable investment income. The company revised the 22Q1 net profit from 660 million yuan to 1.122 billion yuan. Based on the updated results, 22Q2 achieved a net profit of 821 million yuan to 1.101 billion yuan, an increase of 12.61% and 51.0% over the same period last year, with a month-on-month change of-27%. The announcement shows that the market price of coking coal rose steadily in the first half of 2022, and the profits of steel mills and coke enterprises are low in recent years. However, the investment income of China Coal Huajin Group Co., Ltd. (49% shareholding) confirmed by the company increased compared with the same period last year, which has a greater impact on the pre-increase in performance in the forecast period.
The profits of the main coke industry declined. 22Q2 achieved coke production of 922300 tons, down 1.41 percent from the same period last year, up 4.25 percent from the previous year, and coke sales of 923200 tons, down 6.25 percent from the same period last year, with an increase of 4.04 percent. The average selling price of 22Q2 coke was 2960.5 yuan per ton, up 45.11% from the same period last year and 13.36% from the previous month. In terms of cost, the unit purchase cost of coking coal was 2254.57 yuan per ton, an increase of 58.2% over the same period last year and 15.34% month-on-month. As the growth rate of cost-end prices is higher than that of coke prices, the profits of the main coke industry have declined, and the gross profit of 22Q2 coking (coke sales revenue-coking coal purchase amount) is only 69 million yuan, down 81% from the same period last year and 3.9% from the previous month.
The prices of chemical products in the company have all risen. The prices of 22Q2's main chemical products rose across the board, of which asphalt prices rose 33.46 percent from the same period last year, up 3.24 percent from the previous year; industrial naphthalene prices rose 38.49 percent from the same period last year, down 0.61 percent from the previous year; methanol prices rose 13.83 percent from the same period last year, up 3.81 percent from the previous year; carbon black prices rose 33.58 percent from the same period last year, up 13.38 percent from the previous year; and the price of pure benzene rose 19.12 percent from the same period last year and 12.66 percent from the previous year. According to wind data, the average spot price of 2022H1 Brent crude oil is $108.09 per barrel, an increase of 66.01% over the same period last year. Among them, the average price of 22Q2 Brent crude oil is $114.08 per barrel, an increase of 65.04% over the same period last year, and an increase of 11.42% over the previous month. Under the background of high oil prices, the coal chemical scene continues to improve, and the company's chemical prices may rise again.
Investment suggestion: the company holds 49% stake in Huajin of China Coal, the main coal products are national scarce high-quality lean coal, with stable and strong sustainable profitability, will become a favorable support for the company's profits. We raise the company's profit forecast, and it is estimated that the return net profit of the company from 2022 to 2024 will be 40.21 million RMB, corresponding to EPS 1.57, 1.75, 1.83, and PE of July 13, 2022, 4 times, 3 times, 3 times respectively. Maintain the "cautious recommendation" rating.
Risk hint: macroeconomic growth is not as expected, China Coal Huajin investment income is not as expected, coke prices fell sharply.
