Description of the event
The company released its 2023 annual report. In 2023, the company achieved operating income of 28.518 billion yuan, -18.63% year on year; realized net profit of 5.179 billion yuan, -26.26% year on year; net profit after deduction of 5.083 billion yuan, or -30.95% year on year; and net operating activity flow of 6.938 billion yuan, or -30.41% year on year. Basic earnings per share were 1.44 yuan/share, with a weighted average return on net assets of 19.45%, a year-on-year decrease of 11.94 percentage points.
Incident reviews
The fall in the center of coal prices in 2023 led to a decline in performance. The coal sector accounted for 87.1% of the company's revenue in 2023, a year-on-year decrease of 6.91 percentage points; however, gross profit accounted for 99.32%, an increase of 0.83 percentage points over the previous year; the coal sector was the main factor affecting the company's performance. The price of all types of coal fell in 2023. The average annual price of the Qinhuangdao Port Thermal Coal Association was 714 yuan/ton, -1.09%; the average annual average price of coal pits at the end of Yangquan was 932 yuan/ton, -19.33%; the average annual price of coal injection truck plate prices in Yangquan was 1,483 yuan/ton, -24.02%; the average annual price of smokeless medium block in Yangquan was 1,535 yuan/ton, -18.44% year over year. In 2023, the company achieved coal production of 45.91 million tons, +1.5% year over year, sales of 41 million tons of coal, -11.7% of the year, selling price of 606 yuan/ton, -14.64%; the cost of a ton of coal was 296 yuan/ton, -18.9%; gross profit per ton of coal was 310 yuan/ton, -10.14% year over year. The sector's profit declined due to coal prices.
The new energy business continues to advance. In 2023, the company fully integrated R&D resources and R&D personnel to strongly support the development of the new energy and new materials industries; the new energy business continued to break through, and 1GWh sodium-ion batteries and PACK batteries entered the trial operation stage. The world's first batch of commercial sodium-ion electric two-wheelers was released. All four photovoltaic module production lines have been completed. The N-type production line has a maximum daily output of 5.56 MW, and production line efficiency continues to rise. In terms of revenue, other businesses belonging to New Energy achieved revenue of 3123 million yuan in 2023, +70.48% over the same period last year. In 2024, the company plans to achieve the 3GW sales target for photovoltaic modules and a sales target of 400MW or more for sodium electricity, and revenue may continue to grow.
A sharp increase in the dividend ratio may boost the company's valuation level. According to the annual report profit distribution plan, the company plans to pay 7.18 yuan (tax included) for every 10 shares in 2023, for a total dividend of 2,590 billion yuan (including tax), accounting for 50.01% of net profit attributable to mother in the consolidated statement, an increase of nearly 20 percentage points over the previous year. Based on the closing price on April 18, the dividend rate is approximately 7.1%. Based on the relationship between the net market ratio and the PB dividend ratio and the expected dividend rate, an increase in the dividend ratio may lead to an increase in the company's valuation level.
Investment advice
The company's 2024-2026 EPS is expected to be 1.22, 1.24, and 1.40 yuan respectively, corresponding to the company's closing price of 10.15 yuan on April 19, and the 2024-2026 PE is 8.4\ 8.3\ 7.3, respectively. The company's business plan is to reduce coal production in 2024, but the company continues to build a total production capacity of 7 yuan and 10 million tons in the Boli coal mine, and is expected to contribute profits in the later stages of 2025 and 2026. At the same time, the company's increase in the dividend ratio is also expected to boost the medium- to long-term valuation level, and we maintain a “holdings increase-A” investment rating.
Risk warning
There is a risk that the macroeconomic growth rate will fall short of expectations; the risk that coal prices will fall short of expectations; the risk of production safety; the risk of construction and profit of new energy projects falling short of expectations, etc.