Under the impact of the epidemic on volume and price, the company's profit declined significantly in the first half of 2020. But Q2 has shown a month-on-month improvement trend in a single quarter. Despite the decline in coke performance, considering the two-dimensional layout of the company's hydrogen energy business in the industrial chain and the national region, we are optimistic about the potential to improve the valuation of the hydrogen energy sector and maintain the company's "buy" rating.
First-half results fell sharply compared with the same period last year, but Q2 improved quarter-on-quarter. In the first half of 2020, the company realized operating income / net profit of 52.45 billion yuan / net profit of 52.45 million yuan (year-on-year changes of-32.16% and 89.73% respectively). Corresponding to EPS0.02 yuan, the decline in performance was mainly due to a significant decline in the output and price of the coke plate, and the negative impact mainly occurred in Q1.
Q2 single-quarter operating income / net profit was 30.23 billion yuan respectively, a significant increase compared with the previous quarter. The company's revenue from coking products / coal / new energy vehicles and hydrogen sector accounted for 88.0%, 6.2%, 5.6% respectively in the first half of the year. The company forecasts a net profit of 380 million yuan in the first three quarters or as a whole, which is expected to include 175 million yuan in investment income corresponding to the transfer of 55% equity in Tangshan Meijin.
The volume and price of coke fell both in the first half of the year, and the gross profit per ton of coke fell by more than 50%. The company's 2020H1 coke output is 2.58 million tons (year-on-year-14.3%), the corresponding sales price is 1788 yuan / ton (year-on-year-26.7%), unit cost of sales is 1505 yuan / ton (year-on-year-18.3%), gross profit per ton of coke is 283 yuan (year-on-year-53%), and the gross profit margin of coking business fell 7.15pcts to 15.83% year-on-year. The output of washed coal was 715700 tons (- 31.4% compared with the same period last year), and the gross profit margin was 40.17%, down 6.53pcts from the same period last year. New energy vehicles and hydrogen business achieved operating income of 295 million yuan, year-on-year-18.74%, operating cost of 238 million yuan, year-on-year-23.11%, gross profit margin 19.33%, up 4.59pcts.
In the process of spin-off and listing, hydrogen energy planning has been promoted in an orderly manner. Feichi Motor sold 214vehicles of various types in the first half of 2020, of which 114 were hydrogen fuel passenger cars, achieving a net profit of 19.82 million yuan (- 12% compared with the same period last year). The company has previously announced plans to split Flying Motor into gem listing. Hongji Chuangneng invested by the company continues to promote the research and development of ultra-thin proton membrane (8-10 micron) CCM and high stability anti-reverse catalyst. Hongji Chuangneng currently has an order amount of more than 55 million yuan, and membrane electrode products have entered a fuel cell cooperation project of an European automobile company.
Risk factors: slowing economic growth affects coke demand; hydrogen fuel cell vehicle policy is not as good as expected.
Investment advice: considering the low base of the company's first-half performance in the first half of the year, we downgrade the company's 2020-2022 EPS forecast to 0.15 shock 0.21 PE45/31/28x 0.24 yuan (the original forecast is 0.17 pound 0.26 pound 0.28 yuan), and the current price is 6.62 yuan, corresponding to the 2020-2022 PE45/31/28x. Using the segment valuation method, regardless of the additional issuance plan being planned, we give the coke plate a valuation of 15 billion yuan and the hydrogen energy sector a market capitalization of 23 billion yuan, corresponding to the target price of 9.27 yuan. Despite the large fluctuations in coke earnings, the hydrogen energy sector has growth and valuation potential to maintain the company's "buy" rating.
