Event: according to the 2018 annual report released by the company, the operating income during the reporting period reached 6.85 billion yuan, an increase of 8.1% over the same period last year, with a net profit of 660 million yuan, corresponding to an EPS of 0.92 yuan per share, an increase of 27.8% over the same period last year. The impairment of large assets reached 490 million yuan, affecting the net profit of 340 million yuan in the current period. At the same time, the company plans to distribute a cash dividend of 2.80 yuan (including tax) for every 10 shares to all shareholders, totaling 200 million yuan, with a dividend rate of 30%.
Coal production and sales are generally stable, and projects under construction will be put into production this year and next year. The company's current production area is located in Jiangsu (Xuzhuang, Kongzhuang, Yaoqiao Mine), with a total production capacity of 8.2 million tons / year. In 2018, the output of raw coal and the sales volume of commercial coal were 779 and 5.36 million tons respectively, slightly down 1% and 2% compared with the same period last year. The mine under construction is located in Xinjiang (106 Coal Mine and Weizigou Mine), with a total production capacity of 4.2 million tons per year. Of these, the first phase of 106 coal mines (1.2 million tons / year) is nearing completion, while the progress of the Weizigou project is about 50%, which is expected to contribute production this year and next year respectively. Benefiting from the commissioning of projects under construction, the company's raw coal output is expected to reach 800,899 and 9.99 million tons from 2019 to 2021, an increase of 3%, 12% and 11% over the same period last year.
The sharp rebound in the performance of the coal sector is mainly due to a significant reduction in impairment. The profit and loss of the coal sector in 2018 was about 1.14 billion yuan, up 93% from the same period last year, mainly due to the reduction of asset impairment from 740 million yuan to less than 100 million yuan this year. It is estimated that the net profit per ton of coal is 212 yuan, which is basically realized in the case of high coal prices throughout the year. Looking to the future, it is expected that the coal price center will fall steadily, which will have a great impact on the company's performance, but the production of Xinjiang mining area will weaken the adverse impact to a certain extent. It is estimated that the performance of the coal sector from 2019 to 2020 is 10.6,8.8 and 930 million yuan, which is still maintained at a high level.
Non-coal business continues to be a drag on performance. In 2018, electric power, aluminum processing and other non-coal businesses lost 3.1,1.9 and 60 million yuan respectively. In addition to operating factors, the asset impairment loss of up to 300 million yuan in the non-coal sector this year is an important reason for the substantial loss. Looking forward to the future, the 230,000 kilowatt unit will be put into production in 2019H, replacing the original 440,000 kilowatt small unit with poor operation, and it is expected that the loss of the power sector will be significantly reduced.
Maintain the "prudent recommendation-A" rating. At present, the operation of the company is relatively stable, and the successive commissioning of coal mines and thermal power units under construction will reduce the impact of falling coal prices to a certain extent, while poor operation of non-coal business will be a drag on performance. It is estimated that the net profit from 2019 to 2021 is 6.4,6.8 and 710 million yuan, corresponding to 0.89,0.94,0.99 yuan per share, an increase of-3%, 6% and 5% over the same period last year, maintaining a prudent recommendation-A rating.
Risk tips: a sharp pullback in coal prices; lower-than-expected progress of projects under construction; provision for large asset impairment losses
