Introduction to this report:
The decline in the cost of coal products mitigated the decline in revenue, the overall operating performance was steady, and the power generation business continued to expand. It is expected that the downward trend in revenue will be mitigated starting in Q2.
Key points of investment:
Maintain an “Overweight” rating. The company achieved revenue of 2,051 billion yuan (-8.34%) and net profit to mother of 431 million yuan (-29.09%) in the first quarter of 2024, in line with market expectations. We maintain the company's 24-26 EPS forecast of 1.70, 1.73, and 1.78 yuan, and maintain the target price of 15.3 yuan.
The decline in the cost of coal products mitigates the decline in revenue, and revenue is expected to increase in Q3. In the first quarter of '24, the company completed 2.54 million tons of raw coal production, an increase of 15% over the same period, and sales of commercial coal of 1.92 million tons, a decrease of 2.7%.
The average sales price per ton is 1,017 yuan/ton, (-56 yuan/ton), the ton cost is 561 yuan/ton, (-19 yuan/ton), and the gross profit per ton is 456 yuan/ton, (-36 yuan/ton). Judging that the company's performance in the second quarter was slightly pressured, but fluctuations were limited. It is expected that the price of coking coal will rise in the third quarter, and the performance will rise.
Operating expenses have risen, but overall operating performance has been steady. In the first quarter of '24, the company's management and R&D expenses increased by about 70 million yuan year-on-year. By the end of the reporting period, the company was receiving 7.464 billion dollars in cash, an increase of about 600 million. The balance ratio remained low at 38.8%, and the operation continued to be steady.
The power generation business is gradually expanding, and new growth is expected to be achieved. In 2023, the company completed a power generation capacity of 3.356 billion kilowatts (including Qian Yingzi Power Generation Company), and the Qidong distributed photovoltaic power plant was put into operation during the reporting period; Wanheng New Energy and Huaibei mining area distributed photovoltaic projects are about to commence; the Qianyingzi Phase II expansion is expected to be put into operation in 2024, and the power generation business is expected to become a new growth highlight for the company.
Risk warning: The macroeconomy fell short of expectations; coal prices fell more than expected.