In 2017, we judge that the coal market will show a slightly tight balance between supply and demand. It is estimated that the annual center of Q5500 in Qingang will be between RMB600-650RMB / ton, the company's quarterly report EPS will be RMB0.22RMB, EPS for the whole year is expected to be RMB0.8x, Pmax E is only 6.3times, seriously undervalued, Henan state-owned enterprise reform, Shenhuo chairman taking office, set off a wave of company reform, and Henan Investment Group is expected to integrate. Based on a 17-year 10-fold Pamp E valuation, the target price is 8 yuan, which is 60% higher than the current share price.
Under the supply-side reform, the output capacity was 2.75 million tons, and the impairment of coal mines was all in place. At present, the company has 7 pairs of production mines, with an approved production capacity of 10.75 million tons, of which equity production capacity is 9.06 million tons, accounting for 84% of the total.
The coal type is power coal. Under the supply-side reform, the company closed 400000 tons in 2016 and 2.35 million tons at the end of 2018. For this reason, the company has planned to reduce the value of all the coal mines that will be closed in the future by 825 million yuan. We expect coal production from 2017 to 2019 to be 10 million tons, 9.26 million tons and 8.4 million tons respectively, down 4%, 8% and 9% respectively from the same period last year.
Coal prices increased by 49%, and net profit per ton of coal increased by more than 200%: the coal prices of Q4 in 2016 and Q1 in 2017 were 470 yuan and 453 yuan / ton respectively, corresponding to 650 yuan / ton and 620 yuan / ton of Q5500 in Qinhuangdao in the same period. we expect the central coal price center of the port to be about 600-650 yuan / ton in 2017, and the company is expected to maintain the coal price of 450 yuan / ton in the first quarter for the whole year, up 49% from 301 yuan / ton in the same period. The company's complete cost per ton of coal can be controlled at about 300 yuan, an increase of 10% over 273 yuan per ton in the same period, and the net profit per ton of coal is expected to be more than 90 yuan, an increase of more than 200% over the same period last year.
The reform of state-owned enterprises is heating up: since last year, Henan Province has issued a large number of policies and supporting documents for the reform of state-owned enterprises, and the reform of state-owned enterprises has been accelerated in depth, and substantial progress is expected to be made this year. At the level of Zheng coal, Li Chong, chairman of Shenhuo, was appointed chairman of Zheng Coal, and the national reform is expected to heat up. In addition, Zhengzhou Coal Power Group may be merged into Henan Industrial Investment Group. It is suggested that attention should be paid to the merger and reorganization of coal and power assets under Zheng Coal Group and Henan Industrial Investment Group.
Profit forecast and rating: give a "highly recommended-A" rating. We expect the company's EPS in 2017 to be 0.8 yuan, a year-on-year turnaround. Give the company a highly recommended investment rating: 1) according to the 2017 performance valuation of only 6 times, seriously undervalued, 2) Henan state-owned enterprise reform, Shenhuo chairman took office, setting off a wave of reform, 3) there are expectations of integration with Henan Investment Group. 4) after the impairment is completed, the company will move forward light, with a target price of 8 yuan according to the 17-year 10 times Pmax E valuation, which is 60% higher than the current stock price.
Risk hint: macroeconomic recovery is lower than expected
