Key points of investment
occurrences
Recently, China Shenhua released its 2023 annual report. The company's revenue for the full year of 2023 was 343,074 billion yuan, down 0.4% year on year; net profit to mother was 59.694 billion yuan, down 14.3% year on year; net operating cash flow was 89.687 billion yuan, down 18.3% year on year, and earnings per share were 3.004 yuan/share, down 14.3% year on year.
The 2023 dividend ratio was 75.2% (plan), an increase of 2.4 percentage points over the previous year.
Coal sector: Coal production capacity continues to be released, and medium- to long-term resource continuity is strong. In terms of coal production and sales, the company's commercial coal production in 2023 was 325 million tons, up 3.5% year on year, exceeding the annual sales plan; coal sales volume was 450 million tons, up 7.7% year on year; in terms of coal prices, the price of tons of coal was 584 yuan/ton, down 9.3% year on year. The first and second wells of Xinjie in the Taigemiao mining area of Xinjie in Inner Mongolia have obtained mining licenses. Fulianta Coal Mine, Shangwan Coal Mine, Wanli Mine, and Haerusu Open Pit Mine have completed changes in the scope of mining rights and obtained new mining licenses. The Baode Coal Mine's application capacity has been raised from 5 million tons/year to 8 million tons/year, and has been approved by the State Mine Safety Supervision Administration. Applications for nuclear capacity increases at the Lijiahou Coal Mine and Shengli No. 1 open pit mine are progressing smoothly, and coal production capacity continues to be released, which strongly guarantees the continuation of medium- to long-term resources.
Electricity sector: Electricity costs declined year on year, and sector performance improved markedly in terms of volume and price: total power generation capacity for the full year of 2023 was 212.26 billion kilowatt-hours, up 11% year on year; total electricity sales were 19.75 billion kilowatt-hours, up 11.1% year on year. In 2023, the average electricity sales price in the company's electricity sector was 0.414 yuan/kilowatt-hour, down 1% year on year; due to a decrease in the purchase price of coal, the electricity cost was 0.363 yuan/kilowatt-hour, down 4.7% year on year. In terms of revenue, electricity sales revenue for the full year of 2023 was 85.616 billion yuan, up 9.8% year on year, and electricity sales cost was 72.5 billion yuan, up 5.9% year on year. Among them, revenue from coal-fired power generation reached 83.252 billion yuan, an increase of 10% over the previous year, and the cost of electricity sales was 70.536 billion yuan, an increase of 6.6% over the previous year. The company consumed 73.2 million tons of coal sold within the Group in 2023, an increase of 10.9% over the previous year. At the same time, the total installed capacity of the company's generator sets at the end of 2023 was 44,634 megawatts, and the utilization rate of power generation equipment was further improved, giving full play to the Group's integrated coal and electricity operation advantages, and strongly guaranteeing the supply of coal for power plants.
Transportation sector: The scale of performance has continued to grow steadily, and profitability needs to be repaired. In 2023, the company completed its own railway transportation turnover of 309.4 billion tons and kilometers, an increase of 4.0% over the previous year. The railway division's unit transportation costs increased 10.4% year on year, mainly due to the increase in maintenance costs and labor costs. On the port side, in 2023, the company completed a total of 255.3 million tons of coal shipments at Huanghua Port and Shenhua Tianjin Coal Terminal, of which Huanghua Port carried 209.5 million tons of coal, an increase of 2.1% year on year, and continued to rank first among coal ports in the country; the coal loading volume of Tianjin Coal Terminal was 45.8 million tons, up 1.3% year on year. The port division's transportation cost was 12.5 yuan/ton, an increase of 3.3% year on year, mainly due to increased depreciation and amortization due to the increase in fixed assets. In terms of shipping, in 2023, the company's shipping cargo volume was 152.9 million tons, up 12.2% year on year; shipping turnover was 164.7 billion tonne nautical miles, up 23.3% year on year. The shipping division's unit transportation cost was 0.028 yuan/ton nautical mile, down 28.2% year on year. This is mainly due to a decrease in average shipping prices and a reduction in ship leasing costs. Taken together, the scale of the transportation business continues to grow, and overall profitability has weakened.
Profit forecasting and valuation
From 2024 to 2026, the company's net profit is estimated to be 601.85/617.32/63.015 billion yuan, corresponding EPS of 3.03/3.11/3.17 yuan/share, respectively, and the corresponding PE is 13.07/12.74/12.48 times, respectively. We believe that in the face of the geopolitical energy crisis, supply-side coal supply is still tight. In the future, as the economy recovers and demand for coal grows, the coal price center is expected to rise and remain at a high level. The company's high proportion of Changxie coal, the performance of its main business is highly certain, and the dividend ratio is high, so it will maintain an “gain” rating.
Risk warning
Uncertain risk of national administrative intervention, risk of green energy substitution, risk of falling coal prices, risk of economic recovery falling short of expectations.