A large integrated energy private listed company. Yongtai Energy was founded in July 1992 and listed in May 1998. It is a private integrated energy enterprise controlled by Yongtai Group through an equity acquisition in 2007. The company adheres to the development strategy of “coal-based electricity, energy storage as the wing” and accelerates the formation of a new two-wheel drive pattern of “traditional energy+new energy storage”. In 2020, with the completion of corporate debt restructuring, financial expenses were drastically reduced, debt returned to a reasonable level, and a new stage of development was ushered in. As of the first three quarters of 2023, the company achieved revenue of 21,979 billion yuan; net profit after deducting non-return to mother was 1,618 billion yuan, an increase of 25.61% over the previous year.
Coal business: The asset quality is excellent, and the long-term increase is considerable. 1) The company's coal mines are mainly distributed in regions such as Jinshan, Shaanxi, and Mengxin. Among them, the Shanxi mining area produces high-quality coking coal. As of the first half of 2023, the company was producing 11.1 million tons/year of coking coal, and the total production capacity of its coal mines such as Sendayuan and Nanshan is progressing in an orderly manner. 2) In December 2022, the company officially started construction of the Yihua Haizetan coal mine project. The conditions for coal production will be in place in the third quarter of 2026, and production will be achieved in 2027. Haizetan produces high-calorific value chemical coal and thermal coal. After production is put into operation, the company's overall coal production capacity will be greatly increased, and the product structure will be further optimized. Based on the current approved construction capacity of 6 million tons/year, a net profit of about 2 billion dollars can be achieved after completion.
Electricity business: Electricity reform has achieved remarkable results, and coal-electricity collaboration has deepened. 1) The company mainly has thermal power installations, holding a total installed capacity of 8970 MW, mainly distributed in Jiangsu and Henan provinces, both of which are the main local power plants. After the Haizetan project is put into operation, part of the thermal coal will be used to meet the coal needs of the company's power plants, which is conducive to reducing costs and achieving integrated development of coal power. 2) Benefiting from the 2021 electricity price reform, the company's electricity sales price in 2022 increased by about 20% year-on-year. On November 10, 2023, the National Development and Reform Commission and the Energy Administration jointly issued the “Notice on Establishing an Electricity Price Mechanism for Coal Capacity” to implement a two-part electricity price policy for coal power. Under the capacity electricity pricing mechanism, the profit stability of the company's electricity business will improve, and the valuation system is expected to be reshaped.
Energy storage business: Lay out the entire vanadium battery industry chain to seize the blue ocean of new energy storage. The company accelerated the deployment of the vanadium liquid flow battery energy storage industry, acquired Huihong Mining to obtain high-quality vanadium ore resources in August 2022; cooperated with Changsha University of Technology and Professor Jia Chuankun to obtain core patented technology for vanadium batteries in December 2023; and acquired shares in Vnergy, a technology startup company at the National University of Singapore, in October 2023 to acquire its leading all-vanadium liquid flow battery energy storage technology. The company belongs to 3000 tons/year high purity V? O? Construction of the metallurgical preparation production line and the 300 MW/year vanadium liquid flow battery production line began in June 2023 and will be put into operation in the second half of 2024, with an estimated annual output value of more than 1.2 billion yuan.
Investment advice: initial coverage, buy rating. Considering that the nuclear increase in the company's coal production capacity has yet to be released, there is still room for improvement in the cash flow rate of the power business general agreement, and the company's overall profit is expected to rise steadily. We expect the company's total revenue for 2023-2025 to be 348.2/380.1/405.3 billion yuan, respectively, and net profit to mother of 22.6/27.2/3.05 billion yuan, respectively. First coverage, giving a “buy” rating.
Risk warning: 1) The decline in coal prices exceeds expectations; 2) the commissioning progress of new projects falls short of expectations; 3) the risk of fluctuations in feed-in tariffs.