Event: the company recently released its three-quarter report of 2018, with operating income of 3.65 billion yuan in the first three quarters, down 18.9% from the same period last year; net profit of 160 million yuan, corresponding to EPS of 0.16 yuan per share, down 73.2% from the same period last year; and 140 million yuan of non-return net profit, down 76.1% from the same period last year. Of this total, Q3's single-quarter operating income was 1.27 billion yuan, down 20.4% from the same period last year, while the net profit returned to its home was 60 million yuan, down 70.4% from the same period last year.
Comments:
1. Production and sales of Q3 increased slightly, and production and operation returned to stability. Q3 single-quarter raw coal production and sales were 211 / 2.2 million tons, down 14.7% and 16.4% compared with the same period last year, mainly due to the closure of Micun Mine (1.9 million tons / year) in 2017Q4.
From a month-on-month point of view, Q3 production and sales increased slightly by 0.7% and 2.5%. After the mine was shut down and the working face was replaced at the beginning of the year, the company's operation and production entered a stable stage again. At present, the company has no mines under construction or de-production capacity, the approved production capacity has been reduced to 8.85 million tons / year, the annual output will be maintained at about 8.2 million tons.
two。 The price moves up steadily, and the characteristics of the off-peak season are weakened. Since 2018, the coal price center has been further moved up, and environmental protection and safety inspections have superimposed imported coal to control price fluctuations in the light peak season. The comprehensive selling price of raw coal of 2018Q1-Q3 Company is 452, 469, and 463 yuan / ton respectively, with a year-on-year change of 0.4%, 15.0% and 8.9%. Except for the decline of coal quality caused by production factors in Q1, the fluctuation of price for the whole year has narrowed significantly, and the characteristics of the off-peak season have been obviously weakened. Looking forward to the future, under the condition of stable operation, the comprehensive price will be maintained at about 465 yuan / ton.
3. The cost rebound continues, suppressing the profit margin of the coal sector. In terms of sales volume, the cost of Q3 sales reached 282 yuan per ton, a year-on-year increase of 25.9% and a month-on-month increase of 8.0%. Since the beginning of this year, security inspections have become more stringent, and the sharp rise in relevant investment is an important reason for the continued rebound in costs. It is estimated that the net profit of Q3 per ton of coal in a single quarter is 44 yuan, which is basically the same as the reported level, but has dropped sharply by 49.0% compared with the whole year of 2017. Looking to the future, high costs suppress profit margins, and it is expected that the growth of net profit per ton of coal is limited, which will be maintained at around 50 yuan.
4. Profit forecast and investment rating. It is estimated that the company's EPS for 2018-2020 will be 0.21, 0.23, 0.22 yuan per share, with a year-on-year change of-66 percent, 9 percent, and 2 percent. The company is greatly affected by the loss of production capacity. At present, production and operation have returned to normal, and the performance is expected to remain stable after going down the stage. Henan coal and power restructuring continues to advance, the group may undertake high-quality power assets, which will help the company's coal business to strengthen and resist the downside risks of the industry. Maintain the "prudent recommendation-A" rating.
5. Risk hint: the production mine is included in the capacity removal plan, and the cost of production safety is further raised.
