双焦下滑拖累Q1 业绩。一季度受下游钢厂需求淡季以及铁水产量恢复不及预期影响，上游双焦急速下跌，Q1 三级冶金焦以及宁夏1/3 焦煤均价环比Q4 分别下跌3.3%/3.7%。公司层面Q1 焦炭单吨营收约1533 元/吨，同比/环比分别-14.5%/-8.9%，炼焦精煤单吨原材料价格约1156 元/吨，同比-20.8%。展望Q2，当前双焦价格已经进入右侧上涨期，下游铁水产量仍有修复空间，截至4 月19日当周，国内样本钢厂铁水日产量为226.29 万吨，同比-7.9%。且当前钢厂修复后的盈利能力决定其存在增产动力，在库存低位情况下双焦价格上行弹性值得期待。Matters:
The company released its 2024 quarterly report. During the reporting period, the company achieved revenue of 8.226 billion yuan, +22.19%/-5.82% year over year, net profit to mother of 1,421 billion yuan, +19.89%/-19.26% year over month; net profit after deducting non-return to mother was 1,482 million yuan, +15.79%/-17.80% year over month. The total amount of impairment preparations calculated by the company for the whole year was 39.939 million yuan, affecting net profit attributable to the mother by 31.38 million yuan, mainly to prepare for falling inventory prices and prepare for bad debts accruing accounts receivable.
Commentary:
The decline in bifocals dragged down Q1 results. The first quarter was affected by the low demand season for downstream steel mills and the fall in the recovery of molten iron production. The average price of Q1 grade 3 metallurgical coke and 1/3 coking coal in Ningxia fell 3.3%/3.7% month-on-month, respectively. At the company level, Q1 revenue per ton of coke was about 1,533 yuan/ton, -14.5%/-8.9% year-on-year, respectively. The raw material price for a single ton of coking refined coal was about 1,156 yuan/ton, or -20.8% year-on-year. Looking ahead to Q2, bifocal prices have now entered a period of upward trend on the right, and there is still room for restoration in downstream molten iron production. As of April 19, the daily iron output of domestic sample steel mills was 2.262,900 tons, or -7.9% year-on-year. Moreover, the profitability of the current steel mill after restoration determines that it has the momentum to increase production, and the upward flexibility of bifocal prices is worth looking forward to when inventory is low.
The introduction of EVA contributed to production and sales. In terms of production and sales data, 2024Q1 achieved total polyolefin sales of 563,000 tons, or -10,000 tons/+201,000 tons month-on-year, respectively; achieved sales of 1.755 million tons of coke and -4.0/+174,000 tons month-on-year respectively; achieved sales of 13,000 tons of EVA, with revenue of about 91,500.8 yuan/ton per ton. On the raw material purchase price side, Q1 Company purchased 600.4/1156.5/452.1 yuan/ton for gasified feedstock coal/coking refined coal/thermal coal, -19.0%/-20.8%/-17.3%.
Oil and coal price spreads continue to improve, and in anticipation of further inflation, olefins profits may exceed expectations. The profitability of the company's olefin sector is particularly prominent in chemicals. The reason is that the polyolefin industry is a market-based oil head pricing industry. Thanks to domestic control of coal prices, the coal head method has achieved long-term stable profits through the scissor gap between oil and coal. Domestic oil and coal price spreads are expected to widen in 2024. Crude oil prices are expected to continue to rise in Q2 under re-inflation expectations and increased risk premiums, while domestic thermal coal prices are suppressed by high inventories of downstream power plants and lackluster demand for non-electricity, making it difficult to say that the rise is elastic in the short term. Since the beginning of 2024, thermal coal has been affected by weak downstream demand. The cumulative decline (as of 4.23) has reached 11.7%, and WTI crude oil prices have risen 9.9% year on year during the same period.
The Inner Mongolia project is progressing steadily, and EVA benefits are expected to improve. Construction of the 3 million ton project of the Inner Mongolia project began in March 2023. After all production capacity under construction is put into operation, the production capacity of olefins (excluding EVA) will reach 5.2 million tons.
Continuing the cycle, the temporary company is expected to achieve beta and alpha resonance and successfully solidify the increase; after the EVA device was put into trial production in February, the overall operation was stable. As of late March, the situation was as follows: The design and production capacity has been reached. The products produced are foam materials, with a gross margin of about 40%, and the efficiency is higher than PE products. The company is studying switching to photovoltaic materials. The efficiency of photovoltaic materials is expected to be 1000-1500 yuan/ton higher than foam materials, and the EVA sector is expected to contribute to increased performance in the second quarter.
Investment suggestion: Based on the fourth quarter production forecast of the company's Inner Mongolia project and the actual profit situation of Q1 Dual Focus, we adjusted the net profit forecast for 2024-2026 to be 86.31/142.00/14.275 billion yuan (previous value was 97.79/148.23/15.034 billion yuan), corresponding to the current PE 13x/8x/8x, respectively. Referring to the company's historical valuation and future high production capacity growth expectations, we gave the company a target P/E of 17 times for 2024, corresponding to a target price of 20.06 yuan, maintaining a “strong” rating.
Risk warning: Production capacity release falls short of expectations, macroeconomic recovery falls short of expectations, coal policy changes
