Event: On April 18, 2024, the company released its 2023 annual report. In 2023, the company achieved operating income of 28.518 billion yuan, a year-on-year decrease of 18.63%; realized net profit of 5.179 billion yuan, a year-on-year decrease of 26.26%; and realized net profit without deduction of 5.083 billion yuan, a year-on-year decrease of 30.95%.
23Q4 performance declined slightly month-on-month, gross profit from coal increased month-on-month, and cost rates increased month-on-month. In 23Q4, the company achieved operating income of 6.867 billion yuan, down 11.27% year on year and 10.07% month on month; realized net profit to mother of 908 million yuan, down 56.03% year on year and 27.95% month on month; realized net profit without return to mother of 846 million yuan, down 65.09% year on year and 32.08% month on month. By business and project, 23Q4's gross profit from the coal business increased 4.79% month-on-month. Among them, coal production achieved 1.03 million tons, a year-on-month decrease of 0.81%, the comprehensive coal sales price was 602 yuan/ton, up 6.77% month-on-month, the unit cost of coal was 266 yuan/ton, up 1.02% month-on-month, and gross profit of tons of coal was 336 yuan/ton, up 11.82% month-on-month; however, the gross profit of the 23Q4 company reached 3.069 billion yuan, down 1.28% from the previous month; The cost rate increased by 5.61 pct to 15.64% during the 23Q4 period, mainly due to the increase in R&D expenses of 4.78 pcts to 6.83% month-on-month.
Coal production increased slightly in 2023, with prices and costs falling as well. 1) Production and sales volume: In 2023, the company's coal production reached 45.91 million tons, a slight increase of 1.50% year on year; sales volume reached 41 million tons, down 11.68% year on year. The decline in sales volume was mainly due to a 78.68% decrease in outsourced coal volume to 1.36 million tons year on year. Among them, the sales volume of block coal/pulverized coal/finished coal/slime was 400/158/349/1.33 million tons respectively, all of which decreased year-on-year. 2) Price:
The comprehensive price of coal in 2023 was 606 yuan/ton, down 14.64% year on year; the average price of block coal/pulverized coal/finished coal/slime was 975/1194/546/339 yuan/ton, -13.33%/-21.44%/-13.26%/-9.85% year-on-year.
3) Cost: In 2023, the company's coal unit cost was 296 yuan/ton, a year-on-year decrease of 18.90%; the unit cost of block coal/pulverized/finished coal was 376/798/274 yuan/ton, -29.20%/+0.71%/-18.20% compared to the same period last year.
4) Gross profit: In 2023, the company's gross profit per ton of coal was 310 yuan/ton. Despite a 10.14% year-on-year decline, the gross margin of tons of coal increased 2.56 pcts to 51.20% year on year; by coal type, the gross profit of block coal/pulverized coal/finished coal/slime ton of coal was 599/395/271/339 yuan/ton, +0.85%/-45.60%/-7.61%/-9.85%.
Coal mines under construction have progressed steadily, the efficiency of the power generation business has increased, and the entire sodium electricity industry chain has entered the “first tier” of the country.
1) Coal: The company accelerated the pace of construction of the mine under construction. The Qiyuan mine entered the joint trial operation stage in 2024, and the Boli mine will have the conditions for joint trial operation by the end of 2025. At the same time, the Yushupo 5 million tons/year capacity increase procedure is expected to complete the EIA procedure for the energy improvement project by the end of October. 2) Electricity: In 2023, the company's electricity business generated 1,912 million kilowatt-hours, with sales volume of 1,710 billion kilowatt-hours, up 47.17% year on year; the power business achieved revenue of 509 million yuan, up 137.42% year on year; and the gross margin of the power business was 16.23%, up 4.75 pcts year on year, achieving gross profit of 83 million yuan, an increase of 235.68% year on year. 3) New energy: In 2023, the company's positive and negative electrode materials earned 32.57 million yuan/21.28 million yuan respectively; 1 GWh sodium-ion batteries and PACK batteries entered the trial operation stage, and the world's first batch of commercial sodium-ion electric two-wheelers were released; all four photovoltaic module production lines were completed, and the first production line was completed to begin production line transformation from P-type modules to N-type modules.
The dividend ratio was raised to 50%, and the dividend rate reached 7%. The company plans to distribute a tax-inclusive cash dividend of 0.718 yuan/share, with a total cash dividend of 2,590 million yuan, accounting for 50.01% of net profit for the year. Based on the closing market value on April 18, 2024, the dividend rate is 7.00%. In addition, the company announced the 2024-2026 shareholder dividend return plan. The profit distributed in cash every year is not less than 30% of the distributable profit achieved in that year, demonstrating the company's confidence in future business development and cash flow performance.
Investment advice: The company's mines under construction are progressing steadily, the dividend ratio has increased, and the value of growth and dividend allocation has been highlighted. We expect the company's net profit to be 44.75/49.39/5.667 billion yuan respectively for 2024-2026, corresponding EPS of 1.24/1.37/1.57 yuan/share, respectively, and PE corresponding to the closing price on April 18 will be 8/7/7 times, respectively, maintaining the “recommended” rating.
Risk warning: The risk of macroeconomic fluctuations, the risk of policy changes, the commissioning progress of coal mines under construction falls short of expectations, and the progress of the new energy business falls short of expectations.