Event: The company released its results report for the first quarter of 2024. The company achieved operating income of 6.356 billion yuan in the first quarter, -40.31% year on year; net profit to mother of 583 million yuan, -65.81% year on year; net profit after deducting non-return to mother of 603 million yuan, -65.44% year on year.
Prices & Costs: Prices have declined, and costs have increased slightly. 1) In terms of price, the total price of the company's coal in the first quarter of 2024 was 667.17 yuan/ton, compared to -21.33%; of these, self-produced coal sold at 662.31 yuan/ton, and trade coal sold at 674.09 yuan/ton. 2) In terms of cost, the company's comprehensive coal cost in the first quarter of 2024 was 448.21 yuan/ton, +0.38% year-on-year; of these, the cost of self-produced coal was 308.37 yuan/ton, and the cost of trade coal was 647.44 yuan/ton.
Production and marketing: The decline in production and sales has dragged down performance, and the increase is expected to be gradually released. In the first quarter of 2024, the company achieved coal production/sales volume of 751.46/9.2947 million tons, -29.3%/-25.09% year-on-year; of these, sales volume of self-produced/trade coal was 546.15/3.833,200 tons, or -43.74%/+41.9% year-on-year. Looking forward to the future, Xinshun Mine (1.8 million tons/year) and Zhuangzihe Coal Mine (1.2 million tons/year) will be completed and put into operation in 2023 to hedge against safety supervision pressure. The company plans to produce no less than 33 million tons of raw coal in 2024.
The dividend phase has declined, and it is expected to resume in the future. The company's coal is mainly poor coal, which has the characteristics of low sulfur, low ash, and high heat. It is a high-quality coal for power and coking, and downstream customers radiate large steel companies and power plants. Looking at the sales structure, some thermal coal is used for long-term insurance and supply, and has strong resistance to fluctuations. Metallurgical coal is sold at spot prices, which is highly flexible. In 2023, the company plans to pay a dividend of 1,289 million dollars, corresponding to a dividend rate of 4.59% (4/26 closing price). The company issued the “2024-2026 Shareholder Return Plan” in 2023, further clarifying the 2024-2026 dividend. The profit distributed by the company in cash every year during the planning period will not be less than 60% of the distributable profit achieved in that year. The dividend ratio will increase, and the allocation value is prominent.
Profit forecast: Considering the continuous release of the company's newly built mine production capacity and future product price changes, we expect the company's total revenue for 2024-2026 to be 383/400/40.8 billion yuan, respectively, net profit to mother of 45/47/48 billion yuan, EPS 2.25/2.36/ 2.44 yuan, and PE 6.29/6.00/5.80 times, respectively, maintaining the “buy” rating.
Risk warning: The progress of the project fell short of expectations; the decline in coal prices exceeded expectations.