Incident: On March 28, 2024, the company released its 2023 annual report. In 2023, the company achieved operating income of 150,025 billion yuan, a year-on-year decrease of 33.31%; net profit attributable to shareholders of listed companies was 20.04 billion yuan, a year-on-year decrease of 39.62%; and net profit attributable to shareholders of listed companies after deducting non-recurring profit and loss was 18.591 billion yuan, a year-on-year decrease of 38.61%.
Net profit for 23Q4 was basically flat month-on-month. According to the annual report, in the fourth quarter of 2023, the company achieved net profit of 4.523 billion yuan, a year-on-year increase of 24.06%, a year-on-year decrease of 0.53%, and realized net profit after deduction of 4.342 billion yuan, an increase of 19.76% year-on-year and 3.38% month-on-month.
The dividend rate for A shares is 6.41%, and the dividend rate for Hong Kong stocks is 8.91%. According to the announcement, the company plans to distribute cash dividends of 1.49 yuan (tax included) per share, with a total cash dividend of 11.084 billion yuan, accounting for 55.04% of net profit due to mother and 60% of net profit after deducting legal reserves. Based on the closing price on March 28, 2024, the dividend rates for A shares and H shares are 6.41% and 8.91% respectively.
Coal production and sales increased, and gross margin declined slightly. In 2023, the company produced 13.2.1 million tons of commercial coal, an increase of 0.6% over the previous year; among them, Yancoal Australia increased significantly, with production increasing by 3.977 million tons compared to 2023, an increase of 13.51% over the previous year. Sales of 127.02 million tons of coal were recorded, a year-on-year decrease of 6.2%. In terms of price, the comprehensive price of commercial coal was 803.15 yuan/ton, a year-on-year decrease of 25.49%. According to annual report estimates, the comprehensive cost of commercial coal in 2023 was 388.36 yuan/ton, down 10.88% year on year. Among them, the cost of self-produced coal tons was 349.44 yuan/ton, up 7.11% year on year, and the cost of trading coal tons was 1166.56 yuan/ton, down 21.48% year on year. The coal business achieved a comprehensive gross profit margin of 51.65% in 2023, a year-on-year decrease of 7.93 percentage points. According to the announcement, the company plans to produce 140 million tons of commercial coal in 2024, an increase of 5.97% over commercial coal production in 2023. We believe that the increase in production is mainly due to 1) the commissioning of 1.8 million tons/year of Wanfu Coal Mine; 2) the increase in production at the Australian base.
In 2025, the company will still put into operation 10 million tons/year Wucaiwan No. 4 coal mine, and the company's output is expected to continue to grow.
Chemical prices are falling, and profitability is under pressure. In terms of coal chemical business, the company's total chemical product output in 2023 was 8.5873 million tons, an increase of 8.97% over the previous year. Among them, methanol sales volume was 3.955 million tons, up 4.65% year on year; average sales price was 1,829 yuan/ton, down 9.03% year on year; sales cost was 1,715 yuan/ton, down 9.32% year on year; acetic acid sales volume was 738 million tons, up 3.77% year on year; average sales price was 2,887 yuan/ton, down 19.1% year on year; sales cost was 2,339 yuan/ton, up 10.52% year on year; ethyl acetate sales volume was 426,000 tons, up 17.14% year on year, and average selling price was 5683 yuan/ton year on year. Decreased by 9.74%, sales cost was 5,369 yuan/ton, down 3.69% year on year; liquid crude wax sales volume was 146,000 tons, down 42.1% year on year; average sales price was 6815 yuan/ton, up 0.43% year on year, sales cost was 2308 yuan/ton, down 0.91% year on year; ethylene glycol sales volume was 391,000 tons, sales price was 3,407 yuan/ton, down 12.66% year on year. Sales cost was 2,831 yuan/ton, down 19.93% year on year. The sales volume of caprolactam was 297,000 tons, up 8.72% year on year; sales price was 10,855 yuan/ton, down 3.38% year on year; sales cost was 10,370 yuan/ton, up 1.29% year on year; urea sales volume was 615 million tons, down 2.72% year on year; sales price was 1964 yuan/ton, down 6.51% year on year, and cost was 1,420 yuan/ton, up 4.12% year on year. In 2023, the company's chemical business achieved a gross profit margin of 19.95%, a year-on-year decline of 1.23 percentage points.
In 2024, the company strives for “two increases, three decreases, four improvements”. According to the announcement, the company's balance ratio as of the end of 2023 was 66.6%, an increase of 4.72 percentage points over 2022. Looking ahead to 2024, the company will further develop the “two increase, three decrease, four upgrade” campaign. Focus on the “two increases” in product output and projects to achieve production efficiency.
Optimize production organization, work surface design, and coal mining processes in mines such as Shilausu and Yingpan Dou to achieve production results as soon as possible. Accelerate the construction of key incremental projects and divest coal from the Wucaiwan No. 4 open pit mine before the end of 2024. Resolutely achieve “three reductions” in debt ratios, costs, and capital expenditure. Steadily promote “four improvements” in profitability, total labor productivity, investment in science and technology research and development, and operating cash ratio.
Investment advice: Considering that the company's capital expenditure is relatively stable, there is still room for future production improvement, and the company's guaranteed cash dividend ratio is 60%, and the dividend ratio has investment value. We expect the company's net profit to be 204.39/222.66/ 23.340 billion yuan in 2024-2026, corresponding EPS of 2.75/2.99/3.14 yuan/share, respectively, and the PE corresponding to the stock price on March 28, 2024 will be 8/8/7 times. Maintain a “Recommended” rating.
Risk warning: macroeconomic growth is slowing down; coal prices have dropped sharply; chemical prices have declined sharply, and there is a risk of exchange rate fluctuations.