Event: the company released its mid-2017 report, with an operating income of 2.91 billion yuan in the first half and a net profit of 410 million yuan, corresponding to an EPS of 0.40 yuan per share, to reverse losses. Benefiting from the national capacity removal policy, coal prices rebounded sharply, the business environment improved, and the company's performance improved significantly during the reporting period.
Comments: in the first half of the year, the supply and demand of coal was tightly balanced, and the comprehensive selling price of the company rebounded sharply to 431 yuan / ton, an increase of 83%, helping to successfully reverse losses; this year, coal prices are likely to fluctuate at a high level, and the average price of Q5500 in Qingang is expected to remain at 600 yuan / ton. the rebound in superimposed costs can be controlled, and the performance can be optimistic in half a year; the group is trying to build a coal-power integration strategy, and assets are injected into the imagination. EPS is expected to reach 0.8 yuan per share this year, corresponding to the current share price of less than 8 times, the valuation is expected to continue to repair, maintain the "highly recommended-A" rating.
The composite price rebounded sharply in the first half of the year, and the price is expected to remain high for the whole year: in the first half of the year, the average price of Q5500 in Qingang reached 612 yuan / ton, and the company's comprehensive price rebounded to 431 yuan / ton, which was the main reason for the company's performance to reverse losses.
Coal prices have risen sharply in the recent peak season. In the long run, coal supply and demand remain tight during the 13th five-year Plan period. The price center of Q5500 market in Qingang will return to 600 yuan / ton. The company's annual comprehensive price is expected to reach 430 yuan / ton, a sharp increase of 43% over the same period last year.
The cost rebound is controllable, and the half-year performance is expected to be optimistic: as the performance improves, the cost will rebound slightly, with the sales cost reaching 221 yuan / ton and the complete cost 300 yuan / ton. In recent years, the number of employees in the company has gradually declined, and the burden has been reduced, which is more conducive to cost control. It is expected that the annual cost can be maintained at the level of the first half of the year, coupled with the upside of production and sales in the second half of the year, the half-year performance can be optimistic and the annual EPS is expected to be 0.80 yuan per share.
There is room for imagination in the national reform: Zheng Coal Group is gradually promoting the process of national reform, and the functions of the Social Office are expected to be stripped as soon as possible. In addition, the group strives to build the integration of coal and electricity, which may benefit from the future development of the company. During the reporting period, the company acquired the group's railway assets and released the asset injection signal, which has room for imagination.
Profit forecast and rating: the company's EPS from 2017 to 2019 is expected to be 0.8,0.68,0.65 yuan per share respectively. At present, the PE is less than 8 times, and there is still a lot of room for repair; the national reform continues to push forward, the company or income group coal and power integration development strategy, asset injection has room for imagination, to maintain the "highly recommended-A" rating.
Risk hint: a sharp pullback in coal prices
