Meijin Energy released the 2022 annual report and the first quarter report of 2023 on 2023/04/26:

In 2022, the company achieved operating income of 24.60 billion yuan, an increase of 15.18% over the previous year; net profit of 2.209 billion yuan, a decrease of 13.05% over the previous year; net profit of non-return mothers was 2,246 million yuan, a decrease of 22.05%; net cash flow from operating activities was 3.195 billion yuan, a decrease of 34.93% over the previous year, and basic earnings per share of 0.52 yuan, a decrease of 13.33% over the previous year; the weighted average ROE was 16.38%, a decrease of 5.47 percentage points over the previous year.

In the fourth quarter of 2022, the company achieved operating income of 5.887 billion yuan, an increase of 6.71% over the previous year, an increase of 9.87% over the previous year: net profit of Guimo was 498 million yuan, a decrease of 8.20% over the previous year, an increase of 41.48% over the previous year: net profit of the non-return mother of the mother was 583 million yuan, a decrease of 18.14% over the previous year, an increase of 259.88% over the previous year; net cash flow from operating activities was 776 million yuan, a decrease of 10.82% over the previous year, a decrease of 8.92% over the previous year; the basic earnings per share were 0.12 yuan/share, down 9.45% from the previous year, up 9.45% from the previous year, up from the previous month 50.00%

In the first quarter of 2023, the company achieved operating income of 5.338 billion yuan, a decrease of 13.65% over the previous year, a decrease of 9.33%; the net profit of Guimo was 402 million yuan, a decrease of 40.52% from the previous year, a decrease of 19.28% from the previous month; net cash flow from operating activities was -59 million yuan, a decrease of 106.91% from the previous year, a decrease of 107.60% from the previous year; basic earnings per share was 0.09 yuan/service, a decrease of 41.29% from the previous year, a decrease of 41.29% from the previous month; net profit from non-Gumo was 389 million yuan, a decrease of 41.29% from the previous year, a decrease of 41.29% from the previous month 25.00% reduction.

Coal business: Coal prices have risen and profitability has increased. In 2022, the company's refined coal production was 2,939 million tons, an increase of 1.62% over the previous year, and production remained stable. In 2022, the company's coal business revenue was 5.58 billion yuan, an increase of 4.31% over the same period; net profit was 2.42 billion yuan, up 7.06% year on year; net equity profit was 1,522 billion yuan, up 15.22% year on year. Higher media prices led to an increase in the profitability of the coal business.

Coke business: Prices of raw materials have risen, and the ban has made a small loss. Coke production in 2022 was 5.363 million tons, a decrease of 4.57% year on year; sales volume was 5.433 million tons, down 5.54% year on year; unit price was 35,94.5 yuan/ton, up 17.35% year on year; full unit cost was 3660.1 yuan/ton, up 25.17% year on year; net profit per unit was -65.6 yuan/ton, down 147.25% year on year. Constrained by rising upstream raw material prices, cost pressure increased, and the coke business turned profit to loss.

Hydrogen energy business: Automobile production and sales are growing rapidly, and the scale of the business continues to expand. Automobile production in 2022 was 741 vehicles, up 26.36% year on year, of which 637 were hydrogen fueled vehicles, up 75.97% year on year; automobile sales were 462 units, up 43.03% year on year. The revenue of the hydrogen energy business in 2022 was 2.76 billion yuan, an increase of 264.15% over the previous year; net profit was -160 million yuan, a decrease of 2029.59%; net profit from equity was -110 million yuan, a decrease of 940.32% from the previous year. Qingdao Meijin Hydrogen Energy Technology in the West Coast New Area of Qingdao is currently installing and debugging equipment due to the project being fully closed at the end of 2022. It is expected that the project will be put into production in mid-2023, with a planned production capacity of 5,000 units, and the scale of the hydrogen energy business will continue to expand.

Profit forecasts, valuations and investment ratings: Considering the slow recovery in downstream demand and pressure on coke prices, we revised our profit forecast for 2023 to 2024. The company's revenue for 2023-2025 is estimated to be 24881, 265.63, and 31.182 billion yuan respectively, and the net profit returned to the mother was 2,104, 23.91, and 2,993 billion yuan respectively (the original forecast values from 2023 to 2024 were 32.22 and 3.79 billion yuan, adding profit forecasts for 2025). Earnings per share were 0.49, 0.55, 0.69 yuan, and the current stock price was 7.91 yuan. The corresponding PE was 16.3X/14.3X/11.4X respectively, maintaining the “buy” rating.

Risk warning: The risk of a sharp drop in coal coke prices, the risk of production capacity being released less than expected, the risk that the promotion of the hydrogen energy industry falls short of expectations, and the risk that the public sector used in the research report may be delayed or not updated in a timely manner.