Guanghui Energy released the 2023 Annual Report on April 19, 2024:
In 2023, we achieved operating income of 61,475 billion yuan, a year-on-year increase of 3.48%; net profit of 5.173 billion yuan, a year-on-year decrease of 54.37%; net profit after deducting non-return to mother of 5.541 billion yuan, a year-on-year decrease of 49.95%; and net cash flow from operating activities of 6.598 billion yuan, a year-on-year decrease of 34.97%. Basic earnings per share were 0.8 yuan, a year-on-year decrease of 53.76%; the weighted average ROE was 18.15%, a year-on-year decrease of 26.90 percentage points.
2023Q4 achieved operating income of 11.906 billion yuan, a year-on-year decrease of 46.20% and a decrease of 17.79%; net profit to mother of 323 million yuan, a decrease of 89.01% year-on-year and a decrease of 55.73% month-on-month; net profit after deducting non-return to mother of 713 million yuan, a decrease of 73.71% year-on-year and 2.21% month-on-month.
Coal: Falling coal prices are putting pressure on performance, and a high increase in production and sales can be expected. In 2023, coal production was 26.37 million tons, up 9.59% year on year, including 22.31 million tons of raw coal (+9.13% year over year) and 4.06 million tons of upgraded coal (+12.20% year over year).
Coal sales were 30.99 million tons (YoY +16.07%), including 25.88 million tons of raw coal (+13.30% YoY) and 5.11 million tons of upgraded coal (+32.45% YoY). The price of a ton of coal is 475 yuan/ton (-16.6% YoY), the cost of a ton of coal is 310 yuan/ton (-2.4% YoY), and the gross profit per ton of coal is 165 yuan/ton (-34.6% YoY). 2023Q4 coal production was 6.95 million tons (-1.43% YoY, +27.96% YoY), including 6.01 million tons of raw coal (+0.06% YoY, +35.79% YoY), 940,000 tons of upgraded coal (-10.00% YoY, -6.59% YoY); coal sales volume of 8.92 million tons (+18.68% YoY, +50.26% YoY), including 7.14 million tons of raw coal (+13.25% YoY, +44.76% YoY) and improved coal quality (+6.76% YoY) 99%, +77.29 month-on-month %). In the future, with the production capacity of coal mines such as Malang being put into operation one after another, the high increase in production and sales is expected to hedge against the risk of falling coal prices and drive the company's profit growth.
Natural gas: LNG spreads at home and abroad are widening, and trade gas profits are expected to improve. Natural gas production in 2023 was 580 million square meters, down 26.05% year on year; natural gas sales were 8.684 billion square meters, up 30.99% year on year. The unit price was 44,178 yuan/10,000 square meters (-15% YoY), the unit cost was 40,594 yuan/10,000 square meters (-1.3% YoY), and the unit gross profit was 3,584 yuan/10,000 square meters (-67.0% YoY). 2023Q4 gas production was 135 million square meters (-39.44% year over month, -0.73% month on month), and gas sales volume was 2.95 billion square meters (-11.00% year on year, +54.23% month on month).
The 2024Q1 Japan-Korea international LNG price is 9.33 US dollars/million British heat (equivalent to 2,633 yuan/ton), and the market price of LNG in Guanghui Qidong is 4,872 yuan/ton. The domestic and foreign price difference has widened to 2,240 yuan/ton, up 851 yuan/ton from quarter to quarter. The company's business strategy introduces international supplies into domestic sales, and the profitability of the trade gas business is expected to improve.
Coal chemicals: methanol production and sales have declined, costs have risen and profits have declined. In 2023, production of coal chemical products was 2.11 million tons, a year-on-year decrease of 7.80%, including 910,900 tons of methanol (-19.13% YoY), 652,200 tons of coal-based oil products (+4.40% YoY), and 359,200 tons of by-products (-17.97% YoY). Sales of coal chemical products were 2.7 million tons, a year-on-year decrease of 12.55%, including 1,113 million tons of methanol (-19.63% YoY), 689,600 tons of coal-based oil products (+3.71% YoY), and 705,000 tons of by-products (-24.44% YoY). The comprehensive price of chemical products was 2,842 yuan/ton (-0.1% YoY), the unit cost was 2,170 yuan/ton (+16.8% YoY), and the unit gross profit was 672 yuan/ton (-32.0% YoY).
The cash dividend was 0.7 yuan/share, and the dividend rate was as high as 8.8%. On April 19, 2024, Guanghui Energy issued the “Notice on the 2023 Profit Distribution Plan”, announcing that it plans to distribute cash dividends of 0.7 yuan/share in 2023. The cash dividend amount will reach 4,547 billion yuan, and the cash dividend ratio will reach 87.90%. Closing price on April 19, 2024 7.
Based on 96 yuan, the dividend rate for 2023 is estimated to be 8.8%, which is very attractive for investment.
Profit forecast, valuation and investment rating: Considering the decline in international gas prices, we have revised our 2024-2025 profit forecast. We expect the company's 2024-2026 revenue to be 801.58, 983.33, and 109.21 billion yuan respectively, and realized net profit to mother of 77.54 billion yuan, 124.49 billion yuan, and 13.337 billion yuan respectively (the original profit forecast for 2024-2025 was 10.792 billion yuan, 17.511 billion yuan, plus 2026 profit forecast). Earnings per share are 1.18, 1.90, 2.03 yuan, current stock price 7.96 yuan. Corresponding PE is 6.7X/4.2X/3.9X respectively, maintaining a “buy” rating.
Risk warning: Risk of demand recovery falling short of expectations, slow release of production capacity, and untimely updates of research and usage information data.