The incident company released its first quarter report. In the first quarter of 2024, it achieved operating income of 10.04 billion yuan, a year-on-year decrease of 49.4% and a month-on-month decrease of 15.7%; realized net profit to mother of 8.1 million yuan, a year-on-year decrease of 73.1% and a month-on-month increase of 150.2%.
Improved profitability combined with a recovery in coal export sales. The company's Q1 performance increased month-on-month. In terms of coal business, 24Q1 achieved a total export volume of 9.02 million tons of coal, an increase of 2.0% year-on-year and 11.3% month-on-month.
Among them, the company achieved export sales of 7.8 million tons of raw coal, a year-on-year decrease of 1.1% and a month-on-month increase of 9.3%; export sales of upgraded coal were 1.22 million tons, up 27.3% year-on-year and 25.9% month-on-month. In terms of natural gas business, 24Q1 achieved natural gas sales of 1.18 billion square meters, a year-on-year decrease of 44.1% and a month-on-month decrease of 46.2%. On a year-on-year basis, the decline in the company's performance in the first quarter was mainly due to a decrease in sales volume and sales prices of its main products, natural gas and coal chemical products. The company's profitability increased month-on-month, with gross sales margin of 17.5% in 24Q1, an increase of 3.3 percentage points over the previous month. We believe that the month-on-month increase in the company's performance in the first quarter may be related to factors such as improved profitability and a recovery in export coal sales.
The country's coal demand is expected to grow steadily. Continued progress in the company's coal production capacity approval and approval procedures will drive the growth of energy demand in 2024. Demand for coal is expected to grow steadily, and supply flexibility is weak, and coal safety production is facing certain challenges. In the process of balancing supply and safe production, phased supply disturbances are still expected. It is not ruled out that phased supply and demand tightening will occur. It is expected that coal prices will still be supported. Follow-up suggestions will focus on the elasticity of the company's coal production. The total coal resource reserves of the company's Baishihu mining area, Malang coal mine and eastern mining area are 6.597 billion tons. Currently, the company's coal production mainly comes from the Baishihu mining area. The Malang coal mine has obtained capacity replacement approval from the National Energy Administration, a unified project code for national investment projects, and a blank area prospecting license; the EIA report acceptance form has been submitted to the Ministry of Ecology and Environment and is currently being approved. Driven by the guarantee and supply policy, the company's coal production is expected to be gradually released, contributing to the increase in performance.
The turnover capacity of the Qidong LNG terminal continues to increase, which is expected to drive up the scale of trade gas. The company's 6#20 million cubic meter storage tank will enter the trial operation stage on April 10, 2024. The Qidong LNG terminal already has a turnover capacity of about 7.5 million tons/year. 2 #泊位建设项目安全预评价已通过评审， is in the process of applying to the Provincial Transportation Bureau for approval; the Marine EIA is awaiting review at the previous meeting. The turnover capacity of the Qidong LNG terminal is expected to increase to 10 million tons/year in 2025. We believe that as the turnover capacity of the company's Qidong LNG terminal continues to improve, the scale of the natural gas business is expected to grow under the company's “3+2” flexible business model.
Actively exploring new energy sources, the hydrogen energy business is steadily advancing in the context of encouraging the promotion of the country's dual carbon policy and the intensive introduction of hydrogen-related policies. Relying on its own advantages, the company actively invested in the “Green Power Hydrogen Generation and Hydrogen Energy Integration Demonstration Project”. At present, the project has fully entered the trial production and operation stage, and the entire line of hydrogen generation+industrial by-product hydrogen generation+hydrogen storage+hydrogen transport+hydrogen use from electrolyzed water has been completed. Among them, the analytical purity of hydrogen gas at the hydrogen refueling station reached 99.998%, which met the standard of hydrogen for vehicle fuel; the hydrogen production unit had a purity of 99.992%, and the hydrogen production reached the design standard. The project is expected to produce 660 tons of hydrogen per year after commissioning, which can reduce carbon dioxide emissions by 5,800 tons/year. The project combines multiple economic, social and ecological benefits, and is expected to have a positive impact on improving the company's overall business performance in the future.
The investment proposal estimates that the company's revenue for 2024-2026 will be 683.47, 756.04, and 87.295 billion yuan; net profit due to mother will be 66.35 billion yuan, 75.92 billion yuan, and 9.219 billion yuan respectively, up 28.26%, 14.42%, and 21.42% year-on-year respectively; EPS will be 1.01, 1.16, and 1.40 yuan respectively, corresponding PE will be 7.24, 6.33, and 5.21 times, respectively, maintaining the “recommended” rating.
Risks indicate the risk that downstream demand falls short of expectations, the risk of falling coal and gas prices, the risk that production of new construction projects falls short of expectations, etc.