Event: On April 26, 2024, the company released its report for the first quarter of 2024. In the first quarter of 2024, the company achieved operating income of 17.322 billion yuan, a year-on-year decrease of 8.80%; net profit to mother of 1,590 billion yuan, a year-on-year decrease of 24.70%; net profit after deducting non-return to mother was 1,565 billion yuan, a year-on-year decrease of 24.57%.
The 24Q1 fourth fee fell sharply year over year. In 24Q1, the total of the company's four expenses decreased by 527 million yuan, or 28.88%. Of these, sales/management/R&D/finance expenses were -0.04/-4.07/-0.75/ -40 billion yuan, respectively, -7.61%/34.22%/18.65%/23.21% year-on-year.
Coal production and sales declined year-on-year, remained basically flat month-on-month, and gross profit increased month-on-month. In 24Q1, the company's coal production was 5.2364 million tons, down 7.73% year on year, up 0.20% month on month; coal sales volume was 4,0261 million tons, down 21.08% year on year and 0.23% month on month; the price of tons of coal was 1176.47 yuan/ton, down 15.20% year on year, up 14.70% month on month; ton coal cost was 592.72 yuan/ton, down 17.01% year on year and 22.92% month on month; unit gross profit margin was 49.62%, up 1.10 pcts year on year and down 3.37 pct month on month. The coal business achieved gross profit of 2.35 billion yuan, a year-on-year decrease of 31.56% and a month-on-month increase of 7.16%.
The price of chemical products declined year on year. In 24Q1, the company produced 886,300 tons of coke, up 0.15% year on year and 15.98% month on month; sold 863,400 tons of coke, down 0.25% year on year and 16.47% month on month; average sales price was 2311.81 yuan/ton, down 13.78% year on year and 0.41% month on month. In 24Q1, the company produced 90,500 tons of methanol, down 42.65% year on year and 47.14% month on month; sold 81,300 tons of methanol, down 46.19% year on year and 50.00% month on month; the average selling price was 2161.71 yuan/ton, down 4.39% year on year and up 2.73% month on month. In terms of cost, 24Q1 Company purchased 1,213,200 tons of refined coal, down 2.87% year on year and 23.06% month on month; the purchase price was 1793.34 yuan/ton, down 17.16% year on year, up 2.95% month on month. The company's 100,000 tons/year DMC project, coke oven gas deep utilization project, and carbonate project are expected to be completed and put into operation in October 2024, March 2025, and June 2025, and the expansion of coal chemical production capacity can be expected in the future.
It is proposed to invest in coal-fired power generation projects to jointly develop the coal power industry. The company plans to invest in the construction of a 2×660MW ultra-supercritical coal-fired generator project in Lieshan District, Huaibei City, Anhui Province, and simultaneously build facilities such as desulfurization, denitrification, and dust removal. The project is estimated to have a total investment of 5.261 billion yuan and a capital of 1,010 billion yuan. Huai Kuang Co., Ltd. and Wanneng Co., Ltd. are wholly-owned subsidiaries of the company, with 80% and 20% shareholding ratios respectively. The construction period of the project is estimated to be 30 months. According to preliminary estimates, after the project is completed and put into operation, the total annual profit is 196 million yuan, and the internal return on investment is 18.52%. The construction and commissioning of the new project will give full play to the company's resource advantages, promote the joint development of the coal and power industry, and enhance core competitiveness and profitability.
Investment advice: Considering the center or decline in coking coal and chemical prices in 2024, the company's net profit to mother is estimated to be $56.84/62.54 billion yuan, corresponding EPS of 2.11/2.32/2.75 yuan, and PE corresponding to the stock price on April 26, 2024 is 8/8/7 times, respectively, maintaining the “recommended” rating.
Risk warning: Coal prices have dropped sharply; new production capacity is profitable, and project construction progress falls short of expectations.