Event comment
Affected by resource conditions, the production and sales of self-produced coal declined compared with the same period last year. In the first half of the year, due to the gradual implementation of CK Hutchison's policy of eliminating production capacity during the Spring Festival and the two sessions, as well as the influence of changes in geological conditions of some coal mines in Fengcheng mining area, the output of raw coal was 1.5932 million tons, down 42.76% from the same period last year. The production and sales of commercial coal were 165.88 and 1.7298 million tons, down 37.11% and 30.14%, respectively.
In the first half of the year, the company adjusted the coal trade structure and continued to reduce the scale of coal trade. The purchase and sales volume of coal trade was 2.2537 million tons, down 15.59% from the same period last year. In the second quarter, the company's raw coal production and sales volume were 80.32 and 879800 tons respectively, up 1.67% and 3.51% respectively from the previous quarter.
The gross profit of self-produced coal was at a loss in the first half of the year and reversed in the second quarter compared with the previous quarter. In the first half of the year, the average price of commercial coal in the company was 338.47 yuan per ton, down 21.97% from the same period last year; the cost per ton of commercial coal was 356.82 yuan, down 9.90% from the same period last year, of which the unit production cost was 378.02 yuan, down 2.02% from the same period last year. Benefiting from the recovery of the market in the second quarter, the revenue per ton of commercial coal was 349.93 yuan, up 7.15% from the previous quarter, the cost per ton of coal decreased by 16.72% to 324.79 yuan from the previous quarter, and the gross profit per ton of coal reversed the loss from 88.53 yuan to 25.14 yuan.
During the period, the cost increased, and the management cost increased greatly. In the first half of the year, the company's expenses totaled 279 million yuan, up 7.19% from the same period last year, of which sales expenses decreased by 18.62%, while management expenses and financial expenses increased by 21.76% and 6.27% respectively.
The rise in volume and price led to a loss reduction in the second quarter compared with the previous quarter. Benefiting from the recovery of the market in the second quarter, the volume and price of the company's commercial coal rose, and the gross profit reversed a loss of 86 million yuan to 65 million yuan compared with the previous quarter, but due to the increase in expenses, the performance improved slightly, and the attributable net profit decreased by 21 million yuan to-116 million yuan.
The company plans to close and withdraw some of the loss-making coal mines and pay attention to the progress of the transformation. The company announced that it intends to close down and exit production capacity of 151.08 and 480000 tons in 16-17, which will help the company to reduce losses. We forecast that the company's EPS in 16-18 will be-0.03,0.01,0.02 yuan respectively, maintaining a "buy" rating.
Risk tips: a sharp decline in the macro-economy, supply-side reform is lower than expected.