Introduction to this report:
The decline in coal prices dragged down performance in the first half of the year; coking coal prices bottomed out and rebounded, real estate policies were frequent, steel plans were not leveled off, and steady growth could be expected; premium offers and repurchases showed confidence, and high dividends and high dividend value were highlighted.
Summary:
Maintain target prices and profit forecasts, and maintain the “increase in holdings” rating. In 2023H1, the company achieved revenue of HK$3.442 billion (-27.40%) and net profit of HK$1,233 million (-23.28%). The performance was in line with expectations.
Maintain the company's net profit to parent for 2023-2025 at HK$23.1, 2.35 and HK$2.38 billion, maintain the target price of $3.19, and increase ratings.
The fall in coal prices dragged down performance in the first half of the year. 1) 2023H1 The company's original coking coal output was 2.66 million tons (-1%), coking coal production was 1.76 million tons (+7%), and coking coal sales volume was 1.79 million tons (+3%). Through improved technology and equipment, the company greatly increased the coking coal washing rate to 70% (62% in 2022); 2) The average sales price of coking coal (tax included) 1973 yuan/ton (-548 yuan/ton), of which the average price of Q1 and Q2 was 2266 and 1,683 yuan/ton, respectively. Q2 was affected by a sharp drop in coal prices in the market. Slippery; 3) Raw coal production costs 400 yuan/ton (-18 yuan/ton) mainly benefits from a reduction of 20 yuan/ton in resource taxes and levies levied on the sale price of coal, and 40 yuan/ton (-7 yuan/ton) of refined coal processing fees. It mainly benefits from increased refined coal production and the company's effective cost control.
Coking coal prices have bottomed out and rebounded, real estate policies have been introduced frequently, the steel plan has not been leveled off, and steady growth can be expected. 1) Currently, the spot price of coking coal has risen by about 300 yuan/ton from the June low; 1) Recently, real estate policies have been frequent. Guangzhou and Shenzhen have adjusted the housing approval criteria, and the central bank has adjusted the down payment ratio and loan interest rate for home purchases, bringing great improvements to property market expectations. The commencement of real estate sales is expected to bottom out and pick up; 2) On 8.25, seven departments including the Ministry of Industry and Information Technology issued the “Work Plan for Steady Growth in the Steel Industry”, proposing that supply and demand in the steel industry should maintain a dynamic balance, control expectations have declined, reducing the pressure on raw materials such as coke and coke.
The premium offer to buy back shows confidence, and the value of high dividends and high dividends is highlighted. 1) On No. 7.11, the company announced that no more than 125 million shares would be repurchased and cancelled at HK$2.4 per share, accounting for about 2.47% of the issued shares. The premium was about 17.65% over the last trading day before the announcement. On 8.29, the resolution passed the shareholders' meeting and met the terms of the production offer; 2) The company has maintained an 80% dividend rate for 6 consecutive years since 2017, with a dividend of 0.1 yuan per share in mid-2023, with a dividend rate of 41%. Based on current stock prices, the dynamic dividend rate (2023) is 16.18%, and the allocation value is outstanding.
Risk warning: Coking coal prices fell more than expected; coal production fell short of expectations.