The company's revenue declined year-on-year in the first half of 2023 due to coal price adjustment, but excellent cost control ensured that net profit continued to grow compared with the same period last year. We are optimistic about the company's excellent cost control capabilities and new energy transformation prospects, and maintain the "buy" rating.
Net profit in the first half increased by 27.15% compared with the same period last year. Q2 net profit decreased by 16.12% compared with the same period last year. The company's operating income / net profit in the first half of 2023 was 4.238 billion yuan respectively (year-on-year changes of-4.84% Universe 27.15%). EPS is 0.93 yuan, + 27.15% compared with the same period last year. The net profit after deducting non-profit is 1.11 billion yuan, with a year-on-year change of + 25.76%. Among them, Q2 achieved a net profit of 510 million yuan in a single quarter (- 16.12% month-on-month, + 3.18% compared with the same period last year), mainly due to the month-on-month decline in coal prices.
Sales increased in the first half of the year, but Q2 prices and costs fell month-on-month, and gross profit margin increased. In the first half of 2023, the company's commercial coal production / sales volume was 359.64 million tons (4.17% compared with the same period last year), the price / cost per ton of coal was 545.04 yuan per ton (compared with the same period last year), and the gross profit margin of coal was 48.16% and + 6.78%, respectively. This is mainly due to the better control of the company's coal cost, when the price decline leads to a decline in the main sales revenue. The gross margin of sales can still increase compared with the same period last year. In 2023, Q2 commodity coal production / sales volume was 1.8216 million tons respectively (month-on-month changes were + 6.04% and 7.56% respectively), price / cost per ton of coal were 507.30 yuan per ton (month-on-month change-5.67% on-month change 12.52%), gross profit margin was 49.87%, month-on-month increase 3.93pcts, sales volume decreased, gross profit margin level increased month-on-month.
In the first half of the year, the company started the low-carbon transformation of new energy sources. The company's expense rate during the first half of the year was 14.89%, which was lower than that of the same period last year. According to the business plan disclosed in the company's annual report, the cost during 2023 will be controlled within 1.356 billion yuan, an increase of 237 million yuan over the actual value in 2022. The company announced on March 28 that it will invest in the establishment of Suzhou Wanheng New Energy Company, and plan to make use of the 800000 kilowatt new energy construction target of the second phase expansion project of Qianyingzi Power Generation Company, so as to speed up the layout of the company's new energy industry and take the first step in the transformation to new energy. At the same time, in order to reduce carbon emissions, the company actively promotes distributed photovoltaic power generation projects in mining areas. The distributed photovoltaic power generation project was implemented in Qidong Coal Mine, which started construction on August 3, 2022 and completed at the beginning of 2023. From January to June in 2023, a total of 248.34 million kilowatt-hours of electricity was generated, equivalent to more than 1700 tons of carbon dioxide emission reduction.
Risk factors: macroeconomic recovery is not as expected, affecting coal prices; corporate cost control fluctuates; the progress or effect of new energy transformation is not as expected.
Earnings forecast, valuation and rating: considering the downward forecast of coal prices this year, we downgrade the company's profit forecast for 2023 to 2025 to 1.74x1.91x1.73 (the original forecast is 1.97x2.16x1.99). The current share price is 8.02 yuan, corresponding to 4.6amp 4.2max 4.6x. We select Yanzhou Mining Energy and China Shenhua Energy, two companies that are also deep in the coal and power industry, as comparable companies. According to our profit forecast, the average Pmax E of the two companies is currently 6 times, and we also give the company a target valuation of P/E6x in 2023, corresponding to the target price of 10 yuan, and maintain the company's "buy" rating.