Event: The company released its results report for the first quarter of 2024. The company achieved operating income of 17.363 billion yuan in the first quarter, -8.8% year on year; net profit to mother of 1.59 billion yuan, -24.7% year on year; net profit after deducting non-return to mother of 1,565 billion yuan, -24.57% year on year.
Coal business: Production and sales declined year-on-year, and cost control was excellent. 1) In terms of production and sales, in the first quarter of 2024, the company achieved commercial coal production of 5.2364 million tons, -7.73% year on year; commercial coal sales volume was 4.0261 million, -21.08% year on year; 2) In terms of price & cost, the price of commercial coal tons of coal sold in the first quarter of 2024 was 1,178 yuan/ton, -15.1% year on year; ton coal cost was 593 yuan/ton, -16.92% year on year. 3) In the first quarter of 2024, management expenses were 783 million, down 407 million from year on year, R&D expenses were 329 million, down 76 million from year on year. The quality of the company's assets continued to improve, and the debt ratio fell to -6.53PCT to 46.90%.
Coal chemical business: methanol production and sales declined, and prices fell year-on-year. In terms of coke, in the first quarter of 2024, the company achieved an production/sales volume of 87.63/863,400 tons, respectively, +0.15%/-0.25%; the average price of a ton of coke was 2311.81 yuan/ton, -13.78% year over year. In terms of methanol, methanol production and sales declined. In the first quarter of 2024, the company achieved production/sales volume of 905/81,300 tons, or -42.65%/-46.19% year-on-year; the average price of methanol was 2,162 yuan/ton, -4.39% year-on-year.
The project has blossomed a lot, and future growth can be expected. In terms of coal, the Taohutu coal mine in Inner Mongolia is expected to be completed and put into operation by the end of 2025. The mine's coal type is high-calorific value high-quality thermal coal, with a design capacity of 8 million tons/year. In addition, the Linhuan Coal Mine with an annual output of 2.6 million tons has obtained a mining license, and the Gubei Coal Mine is also speeding up exploration and mining work. In terms of coal chemicals, the company's methanol comprehensive utilization project to produce anhydrous ethanol will enter the trial production stage in 2023, with a production capacity of 600,000 tons/year. It is expected to be put into operation in June 2024. In addition, the 100,000-ton DMC project will also be completed and put into operation in 2024. In terms of electricity, according to the latest announcement, the company plans to invest in the construction of a 2×660MW ultra-supercritical coal-fired generator project in Huaibei City, with an estimated total investment scale of 5.261 billion yuan. After the project is put into construction, the average annual profit is 196 million yuan, and the return on internal investment is 18.52%.
Profit forecast: Considering the continuous release of production capacity of the company's mines under construction and future product price changes, we expect the company's total revenue for 2024-2026 to be 766/815/86.9 billion yuan, net profit to mother of 64/65/70 billion yuan, EPS 2.39/2.42/ 2.60 yuan, and PE 7.49/7.37/6.87 times, respectively, maintaining a “buy” rating.
Risk warning: Project progress falls short of expectations; coal prices fall beyond expectations; falling oil prices are dragging down chemical prices