Core views
The company achieved net profit of 2,266 billion yuan in 2023, an increase of 18.67% year on year, mainly due to a year-on-year increase in coal business production and sales and a year-on-year decrease in thermal coal procurement costs for the power business; 2024Q1 achieved net profit of 467 million yuan, an increase of 11.41% year on year, mainly due to a year-on-year increase in power generation combined with a decrease in thermal coal procurement costs. In the first quarter of 2024, coal prices maintained a downward trend, the company's coal combustion costs continued to improve, and the gross margin of coal declined year-on-year. The company's standard coal purchase price for each coal-fired power plant decreased by 156 yuan/ton in 2024Q1, and the coal mining and selection business achieved a gross profit margin of 56.47%, a year-on-year decrease of 7.18 percentage points. The company's high-purity vanadium pentoxide metallurgical preparation production line, an all-vanadium liquid flow battery and related product production line is expected to be completed and put into operation in the fourth quarter of this year. A new breakthrough has been made in the construction of the Haizetan coal mine. It is expected that the conditions for coal extraction will be met in the third quarter of 2026 and production will be reached in 2027. The transformation of the company's energy storage business and the construction of the Haizetan coal mine continue to advance. The coal and power business are operated in complementary ways, and business performance is expected to continue to grow.
occurrences
Yongtai Energy released the 2023 report and the 2024 first quarter report. In 2023, the company achieved operating income of 30.120 billion yuan, a decrease of 15.29% over the previous year, and realized net profit of 2,266 billion yuan, an increase of 18.67%; realized net profit after deduction of 2,359 billion yuan, an increase of 41.73% year on year; basic earnings per share was 0.10 yuan/share, up 18.74% year on year; and weighted average return on net assets was 5.01%, up 0.60 percentage points year on year. In the first quarter of 2024, the company achieved operating income of 7.321 billion yuan, an increase of 3.58% over the same period last year, and realized net profit of 467 million yuan, an increase of 11.41% over the previous year.
Brief review
Coal-fuel costs continue to improve, and thermal power profits drive performance growth.
In 2023, the company achieved revenue of 30.120 billion yuan, a decrease of 15.29% compared to last year. The year-on-year decline in the company's revenue was mainly due to the year-on-year decrease in the scale of the petrochemical trade business in the current period. The company achieved net profit of 2,266 billion yuan in 2023, an increase of 18.67% year on year, mainly due to a year-on-year increase in coal business production and sales and a year-on-year decrease in thermal coal procurement costs for the power business; 2024Q1 achieved net profit of 467 million yuan, an increase of 11.41% year on year, mainly due to a year-on-year increase in power generation combined with a decrease in thermal coal procurement costs.
By business, the company's coal, electricity and petrochemical trading business achieved revenue of 167.11, 124.18 million yuan and 286 million yuan respectively, with year-on-year changes of +6.28%, -9.3%, and -94.77%; gross profit margins of 10.68%, 49.82% and 6.45%, with year-on-year changes of +17.55, -10.96, and +5.64 percentage points. Affected by the drop in coal prices, the company's electricity business turned a loss into a profit. The gross profit margin of coal declined slightly, and overall profitability improved. In the first quarter of 2024, coal prices maintained a downward trend, the company's coal combustion costs continued to improve, and the gross margin of coal declined year-on-year. The company's standard coal purchase price for each coal-fired power plant decreased by 156 yuan/ton in 2024Q1, and the coal mining and selection business achieved a gross profit margin of 56.47%, a year-on-year decrease of 7.18 percentage points. In terms of the period expense ratio, in 2023, the company's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.28%, 5.19%, 0.41%, and 7.01%, respectively, with year-on-year changes of +0.03, +1.91, -0.01, and +0.08 percentage points; the 2024Q1 company's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.31%, 3.65%, 0.24%, and 6.75%, respectively, with year-on-year changes of +0.10, -0.28, -0.12 and -0.05 percentage points.
The coal power business is developing steadily, and the transformation of energy storage is progressing smoothly
In terms of coal, the company achieved sales volume of 12.9937 million tons of raw coal in 2023, an increase of 17.98% over the previous year; 2024Q1 achieved sales volume of 2.3742 million tons, a decrease of 1.79% over the same period last year. In terms of electricity, the company's feed-in electricity volume in 2023 was 35.391 billion kilowatt-hours, up 4.10% year on year, and the average feed-in price with tax was 474.83/megawatt-hour; the 2024Q1 feed-in power was 9.470 billion kilowatt-hours, an increase of 14.23% over the same period last year, and the average feed-in tariff including tax was 471.40/MWH. In terms of energy storage, in 2023, the company obtained mining rights for the Longling Vanadium Mine in Shitai County, Anhui Province through equity mergers and acquisitions, and the amount of high-quality vanadium pentoxide resources reached 1.5889 million tons. In the first quarter of 2024, the construction of the company's first phase of the 3,000 tons/year high-purity vanadium pentoxide metallurgical preparation production line and the first phase of the 300 MW/year all-vanadium liquid flow battery and related products production line progressed in an orderly manner. It is expected to be completed and put into operation in the fourth quarter of this year. At the same time, the company is actively promoting the integrated optical storage demonstration project. The Nanshan Coal Industry Optical Storage Integrated Demonstration Project signed an EPC contract in March and organized the preliminary work of the project.
The construction of the Haizetan coal mine has entered a new stage, and the construction of the Haizetan coal mine has achieved new breakthroughs and entered a new stage while maintaining the “increase in holdings” rating. In the first quarter of 2024, the Haizetan coal mine project's central return vertical well, main vertical well, and Zhang Yulao return well was successfully unveiled on January 20, March 5, and March 8, respectively, and excavated to the end. It was about a month ahead of schedule, and one step closer to the goal of having coal extraction conditions in the third quarter of 2026 and reaching production in 2027. The transformation of the company's energy storage business and the construction of the Haizetan coal mine continue to advance. The coal and power business are operated in complementary ways, and business performance is expected to continue to grow. We predict that the company's net profit from 2024 to 2026 will be 2,561 billion yuan, 2,624 billion yuan, and 2,695 billion yuan, respectively, corresponding to EPS of 0.12 yuan/share, 0.12 yuan/share, and 0.12 yuan/share, maintaining the “gain” rating.
Risk analysis
The price of coking coal continues to fall: Coking coal products are the company's main source of revenue. Currently, the price of coking coal has dropped significantly from a higher point. If the price of coking coal continues to fall sharply, the company's earnings in the coal sector will decline, and the company's performance in the second half of the year may fall short of expectations.
The price of thermal coal has rebounded sharply: Currently, the price of thermal coal market has clearly declined, and the company's power business has turned a loss into a profit. If there is a sharp recovery in thermal coal prices and the company's power business returns to a state of loss, the company's performance in the second half of the year may fall short of expectations.
Demand for energy storage falls short of expectations: The company is currently deeply involved in the energy storage industry and is making efforts for all-vanadium liquid flow batteries in various fields. If there are major changes in the future energy storage technology route or if demand for energy storage falls short of expectations, the company's future performance growth will fall short of expectations.