Net profit from revenue reached a record high, and production declined: Benefiting from a sharp rise in overseas coal prices in 2022, the company's revenue and net profit reached record highs. Revenue reached 10.55 billion Australian dollars, +95% year-on-year.
The net profit of the mother was 3,586 million Australian dollars, an increase of 353% over the previous year. Against the backdrop of international inflation and the Russian-Ukrainian conflict, the company's average coal sales price in '22 was 378 Australian dollars/ton, +168% year on year. The prices of thermal coal and metallurgical coal were 372/180 Australian dollars/ton, respectively. However, due to the influence of the La Niña weather in Australia, the company's annual equity sales fell 22% to 29.3 million du-tons, while thermal coal and metallurgical coal were 24.6 million tons and 4.7 million tons respectively.
Reduced production and inflation led to higher cash costs: the company's unit cash cost increased from 67 Australian dollars/ton to 94 Australian dollars/ton due to lower production and higher raw materials and labor costs. Among them, raw materials rose 12 Australian dollars/ton to 33 Australian dollars per ton; employee benefits rose 6 Australian dollars to 22 Australian dollars/ton. At the same time, due to rising coal prices and higher coal royalties in Queensland, the company's per-ton royalties rose to 33 Australian dollars/ton, +300% year on year. Cash costs are expected to remain at 92-102 Australian dollars/ton in 2023 to ensure production recovery, increased investment in equipment and labor, and when Australian inflationary pressure is still high.
Abundant cash flow pays off debt early, and tax-free dividends increase investment value: The company's cash flow performance was strong. The company paid off $2.26 billion of debt early, which is expected to save $290 million in financial expenses. By the end of the year, the company's total debt was only 670 million Australian dollars. The company is expected to repay the last interest-bearing loan of $333 million in the first quarter of 2023, laying the foundation for the company to save financial expenses and increase profits. Based on the company's strong performance, the company's annual dividend reached 1.62 billion Australian dollars, 1.23 Australian dollars per share, with a dividend rate of 45%, and the company implemented a year-end tax-paid dividend for the first time, greatly enhancing the actual income of Hong Kong stock investors.
International coal prices gradually returned to rationality, and the company actively recovered production capacity: at the end of 2022, as Australian production recovered and European demand weakened, international coal prices dropped significantly, and the NEWC6000K index fell from $400 per ton to $180 per ton. International coal prices are expected to gradually return to rationality after 2023, but due to factors such as China's economic recovery, the Russian-Ukrainian conflict, and international inflation, international coal prices will remain relatively high in history. In terms of production, due to the weakening weather in La Niña in Australia, the company will step up drainage work at various mining plants, and production will gradually return to normal levels. It is estimated that the amount of coal that the company can sell in 2023 will be 31-36 million tons.
The target price is HK$45.2. Purchase rating: Combining international geopolitical factors, domestic economic recovery, and the re-liberalization of Australian coal, the company's annual coal sales price is expected to be 291 Australian dollars/ton, cash costs of 96 Australian dollars/ton, and equity sales volume of 33.5 million tons. The company's consolidated net profit for 2023 is expected to be $2,859 million.
Give the company industry an average of 4 times the PE, adjust the company's target price for 2023 to HK$45.2. There is room for a 58.9% increase from the current price, and buy the rating.