Event: On April 25, 2024, the company released its 2024 quarterly report. In the first quarter of 2024, the company achieved operating income of 2,051 billion yuan, a year-on-year decrease of 8.34%; net profit to mother of 431 million yuan, a year-on-year decrease of 29.09%; and basic earnings per share of 0.3594 yuan.
The reduction in the volume and price of coal combined with the increase of four fees dragged down profits. In 24Q1, the company's commercial coal sales declined year on year. Combined, the year-on-year decline in the sales price of coal products was greater than the cost drop. The company's gross profit of coal decreased by 97 million yuan year on year, a decrease of 9.98%. In addition, the total four expenses of the 24Q1 company increased by 65 million yuan year-on-year, or 22.16%. Of these, sales/management/finance/R&D expenses were -10.33%/+16.28%/-26.88%/53.17%, respectively.
At the end of 24Q1, the company's balance ratio was 38.80%, down 1.24pct from the end of 23Q1, and 1.54 pct lower than at the end of 2023.
Coal production and sales increased month-on-month in 24Q1, sales prices increased month-on-month, and gross profit of coal increased significantly month-on-month. In 24Q1, the company achieved raw coal production of 2,544,400 tons, up 15.07% year on year, up 5.33% month on month; commercial coal production of 1.948,800 tons, up 11.64% year on year, up 3.54% month on month; commercial coal sales volume of 1.917,000 tons, down 2.71% year on year, up 2.55% month on month; the price of tons of coal was 1017.15 yuan/ton, down 5.18% year on year, up 12.24% month on month; coal The gross profit from the business was 884 million yuan, down 9.98% year on year and up 38.09% month on month; gross profit margin per unit of coal was 44.83%, down 1.11 pct year on year, up 7.46 pct from month to month.
There is broad scope for potential expansion of coal production. According to the company's 2023 annual report, the company's Hengyuan coal mine renovation project, Qianyingzi coal mine reconstruction and second-level deepening project, and Hengtai's deepening technical improvement project are progressing according to plan. In addition, the company has irrevocable acquisition rights for several mining companies of the Northern Anhui Coal and Power Group, the controlling shareholder. The group has 1.8 million tons of coal production capacity outside the listed companies, and there is plenty of room for the company's coal sector to expand production in the future.
Accelerate the layout of the power business. In November 2022, the company and Anhui Energy Co., Ltd. increased capital to build the second phase of the Qianyingzi Power Plant expansion project. The annual power generation capacity of the project is about 4.8 billion kilowatt-hours, and is scheduled to be completed and put into operation by the end of 2024. After commissioning, the installed capacity of the company's electricity equity will increase to 1,050 MW, an increase of 90.84% over the current level, which is expected to become a new profit growth point. In addition, the company's Qidong distributed photovoltaic power plant has been put into operation; Wanheng New Energy's 300 MW wind power project and Huaibei mining area distributed photovoltaic project have been approved and construction is about to begin.
Investment advice: We expect the company's net profit to be 19.32/20.66-2200 billion yuan in 2024-2026, equivalent to EPS of 1.61/1.72/1.83 yuan/share, respectively, and PE corresponding to the closing price on April 25, 2024, which is 8/8/7 times, respectively. Maintain a “Recommended” rating.
Risk warning: Coal prices have dropped sharply; the Group's asset injections and ongoing projects have fallen short of expectations.