Introduction to this report:
Production and sales of the coal business declined, and Q3 is expected to resume growth; the coke business is expected to remain flat in Q1; the ethanol business has already begun to contribute to growth in 24 to 26; there is still room for improvement in dividends after 2024.
Key points of investment:
Maintain an increase in holdings rating. The company announced its 2024 quarterly report. The company's revenue was 17.322 billion yuan (-8.8%) and net profit to mother was 1.59 billion yuan (-24.7%), which was in line with market expectations. We maintain the 24-26 EPS forecast of 2.60, 2.87, and 3.16 yuan, and maintain the target price of 23.76 yuan.
Production and sales declined, and Q3 is expected to usher in a return to growth in performance. The company achieved commercial coal production of 5.236 million tons (-7.7%) in the first quarter; it sold 4.026 million tons (-21%) of commercial coal. The decline in sales volume was significantly lower than production. In our judgment, it was mainly due to accounting measurements (sold but not shipped). The price of a ton in the first quarter was 1,176 yuan/ton (-210 yuan/ton), the ton cost was 593 yuan/ton (-121 yuan/ton), and the gross profit per ton was 584 yuan/ton (-89 yuan/ton). It is expected that the market price of coking coal will increase by 2,100 yuan/ton in the future, which may drive mainstream coking coal companies to continue to rise in Q3 Changxie prices, and Q3 performance is expected to resume growth.
The coke Q1 business is expected to remain flat, and the ethanol business has been contributing to growth in 24 years. 870,000 tons of coke were produced in the first quarter, which was basically the same as the previous year. The selling price of a ton fell to 2,311 yuan/ton (-13.78%). Overall profit is expected to be slightly poor or break-even. Methanol production and sales have all declined by more than 40%. It is determined that due to the gradual internal supply of methanol production capacity after the company put into production of 600,000 tons of ethanol, the annual ethanol production is expected to reach 380,000 tons.
The 2×660MW ultra-supercritical coal-fired generator project is expected to be put into operation by the end of '26; aggregate production capacity is expected to reach more than 30 million tons in '25; Tao Hutu (8 million tons) is expected to be put into operation in 2026, and the company's performance growth in 24-26 is quite certain.
There is still room for improvement in dividends after 2024. The company's dividend rates for 2021-2023 were 36.33%, 37.16%, and 42.6% respectively, showing a continuous upward trend. We estimate that subsequent capital expenditure is expected to decline, and the subsequent decline in capital expenditure and the continued increase in profits are expected to continue to drive up the dividend rate in the future.
Risk warning: The macroeconomy fell short of expectations; coal prices fell more than expected.