The company released its 2022 semi-annual report. The main financial data is as follows:
In the first half of 2022, the company achieved operating income of 6.773 billion yuan, an increase of 51.81% over the previous year, net profit attributable to shareholders of listed companies of 1,545 million yuan, an increase of 253.03% over the previous year, and net profit attributable to shareholders of listed companies after deduction of 1,542 million yuan, an increase of 266.33% over the previous year. Basic earnings per share were $2.14, up 250.82% year over year. The weighted average ROE was 13.7% (up 9.51 percentage points from the previous year)
In the second quarter of 2022, the company achieved operating income of 3.647 billion yuan, an increase of 16.67% over the previous year, an increase of 48.55% over the previous year; achieved net profit attributable to shareholders of listed companies of 765 million yuan, a decrease of 1.92% over the previous year, an increase of 211.22% over the previous year; and achieved net profit of 762 million yuan after deduction, a decrease of 2.31% over the previous year, an increase of 231.59% over the previous year.
The increase in performance in the first half of the year was mainly due to a sharp rise in the volume and price of coal. Specifically:
Coal business: Volume and price have risen sharply. During the reporting period, the company achieved production of 4.189,900 tons of raw coal, an increase of 8.58% over the previous year, and sales volume (excluding personal use) of 3,012,000 tons, an increase of 6.13% over the previous year. The average price of coal sold in the first half of the year was 1,595 yuan/ton, up 98.59% from the previous year, the sales cost of one ton of coal was 588 yuan/ton, an increase of 13.83% over the previous year. The gross profit per ton of coal was 1007 yuan/ton, an increase of 251.21% over the previous year, and gross margin reached 63.15%. On a quarterly basis, 2.177,600 tons of coal were produced in the second quarter, up 19.48% year on year and 8.7% month on month; sales were 1,6813 million tons, up 35.92% year on year, and 26.42% month on month. The average price of coal sold in the second quarter was 1,618 yuan/ton, up 70.33% year on year and 3.31% month on month; sales cost per ton of coal was 582 yuan/ton, down 10.68% year on year, down 2.18% month on month, and gross margin reached 64.02%.
The coal sector achieved net profit of 1,887 million yuan. The continued rise in coal prices was the main reason for the increase in the company's performance. At the same time, 106 coal mines completed nuclear augmentation, increasing nuclear capacity from 1.2 million tons to 1.8 million tons, bringing about an increase.
Electric power and aluminum products business: A small loss. During the reporting period, the company generated 1,358 million kilowatts of electricity, a year-on-year decrease of 32.
At 2%, the power business achieved sales revenue of 823 million yuan (after internal offset) of 823 million yuan, a year-on-year decrease of 19.55%, and a net loss of 1.
8.7 billion yuan, mainly dragged down by rising coal prices. The company achieved a processing volume of 46,700 tons of aluminum, a year-on-year decrease of 16.76%. The aluminum products business achieved sales revenue of 970 million yuan, a decrease of 3.1% over the previous year, and a net loss of 0.2 billion yuan.
Asset impairment may affect profits of $265 million in the first half of the year. The board of directors of the company deliberated and passed a bill to calculate asset impairment preparations. It is proposed to calculate 353 million yuan for various impairment provisions, including fixed assets accruing impairment provisions of 291 million yuan (two smaller self-contained units of the power plant), long-term equity investment accrued impairment provisions of 47.46 million yuan (holding shares in Fengpei Railway Company, and subsidiary railways failed to operate and continued losses), inventory impairment of 14.12 million yuan, and receivables impairment of 870,000 yuan. After considering the impact of income tax and minority shareholders' profit and loss, net profit attributable to the mother for the first half of the year will be reduced by 265 million yuan.
The coal and new energy businesses all have growth points. In terms of coal, the construction of the Weizigou coal mine (2.4 million tons/year) continues to advance, and the project progress has reached 59%. It is expected to be put into operation in 2023, which will further increase the company's main business scale. In terms of the new energy business, the company invested in the construction of a new energy demonstration base project (phase I) in the coal mining collapse area to build a photovoltaic power generation capacity of 263.5 MW. It is expected that full capacity will be connected to the grid within the year, and the new energy business will become a new growth point for the company.
Profit forecast and valuation: Due to the further rise in coal prices, the company's profitability continues to increase. We raised the company's profit forecast. The company's net profit for 2022-2024 is estimated to be 29.39, 31.94, and 3.378 billion yuan respectively (previously 2,433, 26.12 billion yuan, 2,727 billion yuan). Earnings per share were 4.07, 4.42, 4.67 yuan, and the current stock price was 19.99 yuan. The corresponding PE was 4.9X/4.5X/4.3X, respectively, maintaining the “buy” rating.
Risk warning: There is a risk that the release of coal mine production capacity will be limited, coal prices will drop sharply, power generation growth will fall short of expectations, the aluminum processing products market will fluctuate greatly, and information and data used in research reports will not be updated in a timely manner.
