Event Overview: Jizhong Energy released its 2022 annual report and 2023 quarterly report. In 2022, the company achieved operating income of 36.036 billion yuan, an increase of 14.68% over the previous year, and net profit of 4.458 billion yuan, an increase of 62.73% over the previous year, after deducting net profit of 4,395 million yuan from the non-return mother, an increase of 73.66% over the previous year. The revenue of 2023Q1 was 7.925 billion yuan, a decrease of 14.16% over the previous year. The net profit of Guimo was 2,703 billion yuan, an increase of 174.79% over the previous year. After deducting the net profit of the non-return mother was 1,208 million yuan, an increase of 15.51% over the previous year.
Higher coal prices in 2022 drove profit growth. In 2022, the company produced 26.37 million tons of coal, an increase of 1.94% over the previous year. The coal sales volume was 28.92 million tons, down 0.59% from the previous year. The comprehensive price of commercial coal was 1,000 yuan/ton, up 149 yuan/ton year on year. The sales cost of one ton of coal was 640 yuan/ton, an increase of 53 yuan/ton over the previous year. In 2023, the company plans to produce 27.1 million tons of raw coal, an increase of 2.8% over 2022, and the planned revenue is 36 billion yuan, which is basically the same as 2022.
Coal production capacity is expected to increase to 50 million tons/year within three to five years, an increase of 53% over 2022. The company plans to implement an “incremental coal search” project to speed up the acquisition of high-quality coal resources within the Jizhong Energy Group. At the same time, it is actively seeking coal resources with large reserves, excellent coal varieties and good conditions in coal-rich provinces, and strives to achieve 50 million tons of coal as its main business within three to five years. Currently, the Group still has unlisted coal mines with a production capacity of over 20 million tons and 10.1 million tons under construction. In 2023, the Inner Mongolia Company is expected to increase production capacity by 1.2 million tons/year, and the Xijing Mine of Xingtai will be completed and put into operation by 600,000 tons/year.
The development of non-coal businesses drives growth, and the transfer of Jinniu Chemical contributes investment income. The 400,000-ton PVC project is scheduled to be put into operation in May 2023. In April 2023, it was announced that it plans to invest in the construction of a glass fiber pool kiln drawing production line with an annual output of 120,000 tons. The filing of Baijian iron ore exploration reports is continuing. The company's transfer of shares in Jinniu Chemical is expected to increase profit and loss before tax by about 1.6 billion yuan in 2023.
The dividend rate reached 79%, and the dividend rate reached 13.5%. In 2022, it is proposed to distribute a cash dividend of 10 yuan for every 10 shares to all shareholders, totaling 3,534 million yuan, the same as last year. The dividend rate reached 79%, and the dividend rate reached 13.5% based on the closing price on April 28. The company's dividend ratio and dividend ratio are at a high level among coal companies.
Investment advice: High dividends and high dividends highlight value. The transfer of Jinniu Chemical brought an investment income of 1.6 billion yuan. According to the company's strategic plan, coal production capacity is expected to increase by 53% in the next 3-5 years. Non-coal business PVC, glass fiber and iron ore projects drive the company's growth. We expect the company's revenue in 2023-2025 to be 346.47/375.62/40769 billion yuan, or -3.85%/8.41%/8.54% year on year. The net profit of the mother was 5601/5331/6.396 billion yuan, 25.65%/-4.83%/19.98% compared to the same period last year, and the corresponding PE was 4.67x/4.91x/4.09x. The first coverage gave a “buy” rating.
Risk warning: coal prices have fallen sharply, the company's coal production has fallen short of expectations, and demand is recovering slowly.