Event comment

The company's coal production and sales declined compared with the same period last year. In 2015, the company's raw coal output was 15.9026 million tons, down 2.964 million tons from the same period last year, or 15.71 percent, while commercial coal production was 15.6869 million tons, down 15.53 percent from the same period last year. Commercial coal sales were 14.4717 million tons, down 2.485 million tons, or 14.66 percent. Affected by the decline in industry demand, the company's coal production and sales declined compared with the same period last year. Among them, the company's commercial coal production and sales in the fourth quarter were 358.12 and 3.3333 million tons respectively, down 8.63% and 11.59% respectively from the previous quarter. The company plans to produce 16.8 million tons of raw coal in 2016.

The price of coal is weak and the cost is rigid, and the gross profit margin of coal falls sharply. In 2015, the company's average selling price of coal was 226.15 yuan, down 114.07 yuan or 33.53% from the same period last year. The cost of per ton of commercial coal was 219.73 yuan, down 12.60 yuan from the same period last year, or 5.42%. The cost of companies with weak coal prices was slightly rigid, the gross profit per ton of coal decreased by 101.47 yuan to 6.43 yuan compared with the same period last year, and the gross profit margin of coal mining decreased by 28.87 percentage points to 2.84%. The gross profit margin of coal trade is 1.59%.

The expenses are well controlled during the period. In 2015, the company's expenses totaled 1.006 billion yuan, down 21.20% from the same period last year, of which sales expenses decreased by 34.13% year-on-year, while management expenses decreased by 19.78%. Financial expenses increased by 206.14% compared with the same period last year, mainly due to the increase in interest expenses.

Production and sales declined in the fourth quarter, and the loss of impairment caused an increase in performance compared with the previous quarter. The company's coal production and sales declined month-on-month in the fourth quarter, and the market price was weak, which had a certain impact on the company's profits. in the fourth quarter, gross profit decreased by 132 million yuan compared with the previous quarter, while the asset impairment loss was 158 million yuan (mainly bad debts and inventory impairment). Increase the company's performance burden. The company's attributable net profit in the fourth quarter was-708 million yuan, with a month-on-month increase of 361 million yuan.

Pay attention to the progress of local supply-side reform and maintain the "overweight" rating. We forecast that the EPS of the company from 2016 to 2018 will be-0.38,0.35 and-0.34 yuan respectively, maintaining the "overweight" rating.

Risk hint: the macro-economy has fallen sharply, and the supply-side reform is lower than expected.