Key points of investment:
Maintain an “Overweight” rating. The company achieved revenue of 45.395 billion yuan (-23.3%) and net profit to mother of 4.970 billion yuan (-30.5%) in the first quarter of 2024, in line with market expectations. We maintain the company's 24-26 EPS forecast of 1.62, 1.68, and 1.75 yuan, and maintain the target price of 15.12 yuan.
Sales in the coal business declined slightly in 24Q1, and the year-on-year downward pressure on prices may have passed when they were at their peak. In the first quarter of '24, the company completed commercial coal production of 32.73 million tons, a decrease of 1.7%; self-produced commercial coal sales volume was 32.31 million tons, a decrease of 0.8%. In the first quarter, the price of the company's self-produced coal was 598 yuan/ton (-73 yuan/ton); the unit sales cost of self-produced commercial coal was 291 yuan/ton (+18.42 yuan/ton). Looking ahead to the second quarter, the average price of the 23Q2 company has fallen back to 595 yuan/ton, which is basically the same as the 24Q1 price, while the price of thermal coal has bottomed out in mid-April. It is estimated that the bottom of the price of 800 yuan/ton has been proven, up from about 770 yuan/ton in early June 23. Judging that the company's performance is expected to remain flat or decline slightly in the second quarter, and the moment of greatest downward pressure on performance is over.
Sales in the coal chemical business are basically flat, but prices have declined. In the first quarter of '24, the company's coal chemical business products achieved sales of 37.3, 55.1, 39.6, and 130,000 tons of polyolefin, urea, methanol, and ammonium nitrate, respectively, up 2.2%, 14.6%, 21.9%, and 7.4%, respectively. From a price perspective, the average sales price of polyolefin, urea, methanol, and ammonium nitrate was 6848, 2237, 1675, and 2251 yuan/ton, with year-on-year decreases of 2.9%, 17.7%, 8.6%, and 8.5%, respectively.
Continuously optimize the industrial layout and build a “coal-coal electricity-coal chemical-new energy” industrial chain. The second phase of the Shaanxi Yulin Coal Chemical Project is about to commence. The “Liquid Sunshine” project has completed the investment decision, the Pingshuo Antaibao coal power project is being completed, and the Shanghai New Energy Base is being connected to the grid at full capacity.
Risk warning: The macroeconomy fell short of expectations; coal prices fell more than expected.