Main points of investment
Net profit rose 167.64% in 2017 compared with the same period last year, and the decline in production and the sharp increase in expenses led to a significant decline in performance in the first quarter of 2018. In 2017, the company's operating income was 7.691 billion yuan (year-on-year + 7.41%), and the net profit was 465 million yuan, an increase of 167.64%. The EPS was 0.35 yuan, slightly higher than the previous performance forecast and lower than we expected. The profit distribution plan for 2017 will pay a cash dividend of 1.10 yuan (including tax) for every 10 shares, with a total cash dividend of 146 million yuan. In the first quarter of 2018, the company returned to its parent net profit of 87 million yuan and EPS0.07 yuan, down 76.39% from the same period last year, mainly due to the impact of production resumption and production capacity reduction of only one working face in Hongyang No. 3 Coal Mine in the first quarter, while sales management expenses increased sharply.
In 2017, the output of raw coal was reduced by 12.62%, and the gross profit margin of per ton coal sales continued to improve. In 2017, the company's raw coal production / sales volume was 5.614 million / 5.5151 million tons (compared with the same period last year). Among them, the output / sales of raw coal is 1.786 million / 1.662 million tons respectively (compared with-3.98% Maxime 11.60%), and the output / sales volume of washing coal is 3.8277 million / 3.853 million tons respectively (compared with the same period of last year). In terms of price, the comprehensive sales price of the company's commercial coal in 2017 is about 707.72 yuan / ton (+ 52.43% compared with the same period last year); the production cost per ton of coal is about 440.76 yuan / ton (year-on-year + 30.83%). The breakdown is mainly due to the decrease of 15.76% in raw materials compared with the same period last year. The gross profit margin of the coal business was 37.72%, an increase of about 10.28pcts over the same period last year. The company plans to sell 4.97 million tons of commercial coal in 2018, and we expect the impact of the company's coal mine accident in 2017 to continue into this year, resulting in a decline in production and sales.
Coal plate alone show, steam business losses. The company has 5 coal mines with an approved production capacity of 10.5 million tons / year. The main types of coal in each mine are metallurgical coal and some power coal. The company has jurisdiction over two cogeneration power plants with a total installed capacity of 708MW, including 2 × 330MW coal-fired generating units and 4 × 12MW coal gangue generating sets. The company's urban heating network area is 36.94 million square meters. In 2017, Shenyang Coking Coal Company, which is wholly owned by the company, made a net profit of 550 million yuan, which is the main profit.
In non-coal business, the operating income of steam business decreased by 69.47% compared with the same period last year, and the revenue of heating projects increased by 13.71% compared with the same period last year. In terms of operating costs, most of the business costs increased significantly compared with the same period last year, of which the operating costs of heating business and heating projects increased by 14.52% and 9.64% respectively. The gross profit margin of all non-coal business sectors basically decreased compared with the same period last year, of which the steam business suffered a serious loss, with a gross profit margin of-116.19%.
The coking coal leader in Northeast China is expected to usher in a new development bureau in the future. The company actively constructs the four major development patterns of "mining resources, cogeneration, financial holding and new energy new business type", and strives to build the company into a new energy investment company with innovative vitality and continuous ability to create efficiency and increase profits. In February this year, the company signed a strategic cooperation agreement with Liaoning Geology and Mineral Resources to establish a long-term strategic partnership for the development, clean and efficient utilization of coalbed gas resources in Shenyang. The subsequent transformation of the company is worth looking forward to.
Risk factors: large cost fluctuations; macroeconomic fluctuations, affecting coal demand and performance growth; slow recovery of production capacity.
Profit forecast and rating: considering the company's low performance base in the first quarter, slow recovery of mine production and the pressure of various expenses, we downgrade the company's EPS forecast for 2018-2019 (0.29max 0.95 yuan), and add 0.35 yuan to the 2020 EPS forecast. The current price is 5.93 yuan, and the corresponding Pamp E is 20 pound, 18 amp, 17x, respectively. Give the company a target price of 6.54 yuan in 2018, corresponding to P/B1.5x. Considering the limited release of coal production capacity this year, the company was downgraded to "overweight" rating.