Description of the event
The company released the 2023 annual report and the report for the first quarter of 2024: in 2023, the company achieved total operating income of 30.120 billion yuan, a year-on-year change of -15.29%; realized net profit of 2,266 billion yuan, a year-on-year change of +18.67%; net profit after deducting non-return to mother of 2,359 billion yuan, a year-on-year change of +41.73%; basic earnings per share of 0.102 yuan/share, a year-on-year change of +18.74%; the weighted average return on assets was 5.0124%, an increase of 0.6 percentage points over the previous year; cash generated from operating activities Net flow was $7.025 billion, a year-on-year change of +9.03%. 2024Q1 achieved revenue of 7.321 billion yuan, +3.58% year-on-year; realized net profit of 467 million yuan, a year-on-year change of +11.41%; net profit after deduction of 471 million yuan, a year-on-year change of +12.04%.
Incident reviews
Coal production and sales also increased, while the price of tons of coal declined. Affected by the resumption of production capacity of 1.2 million tons of coking coal at Yinyu Coal Mine and Fujuyuan Coal Mine, the company's coal production and sales increased. Total raw coal production in 2023 was 12.9723 million tons, +17.58% year over year; sales volume was 12.9937 million tons, +17.98% year over year. The equivalent price of a ton of coal was 872.46 yuan/ton, -27.73%; the cost of a ton of coal was 390.43 yuan/ton, -13.61% year-on-year; gross profit of a ton of coal was 482.03 yuan/ton, or -36.17% year-on-year. The increase in production and sales partially offset the downward impact of coal prices. In 2023, coal business revenue was 11.337 billion yuan, -14.73%; coal business cost was 5,073 billion yuan, +1.92% year over year; gross profit margin was 6.263 billion yuan, -24.70% year on year; gross profit margin was 55.25%, down 7.31 percentage points year on year.
Fuel costs have declined, and gross margin of electricity has increased dramatically. In 2023, the company achieved power generation capacity of 37.349 billion kilowatt-hours, +4.16%; feed-in electricity capacity of 35.391 billion kilowatt-hours, +4.10%; average comprehensive electricity sales price 0.4722 yuan/kilowatt-hour, +2.09% year over year; average electricity cost 0.4217 yuan/kilowatt-hour, -14.68% year over year; power business revenue of 16.711 billion yuan, +6.28% year on year; gross profit of 1.785 billion yuan, overall gross sales margin of 10.68% This is an increase of 17.56 percentage points compared to the sharp reversal of losses.
2024Q1 month-on-month, coal volume decreased and price increased; electricity volume increased and price decreased. 2024Q1's raw coal output was 2.3952 million tons, +0.49% year over month; sales volume was 2.3742 million tons, -1.79% year over year, of which refined coal production was 674,400 tons, +8.63% year on month, -16.88% month on month; sales volume 617,800 tons, +7.42% year on month, and -26.08% month on month. The equivalent price of a ton of coal was 918.03 yuan/ton, -16.66% YoY, +4.47% month-on-month; gross profit per ton of coal was 518.39 yuan/ton, -26.06% YoY, +14.25% month-on-month. 2024Q1 production and sales declined month-on-month due to safety inspections, but the rebound in coal prices made up for part. In the power sector, in 2024Q1, the feed-in electricity volume was 9.470 billion kilowatt-hours, +14.23% year over month, +10.35% month on month; the average price of kilowatt-hour electricity was 0.4714 yuan/kilowatt-hour, -0.25% year over month, and -3.51% month on month.
The gross margin of coking coal's high-margin cooperative electricity has rebounded, and the cooperative operation of the strengthened version of coking coal and electricity has been steady. By the end of 2023, the company had total coal resources of 3.829 billion tons, of which: coking coal resources totaled 922 million tons and thermal coal resources totaled 2,907 million tons, which are rich in resources; the company currently produces 15 coal mines, with a total production capacity of 17.1 million tons/year. At the same time, the total installed capacity of the company's Electric Power Holdings reached 9.18 million kilowatts, and the total installed capacity of the shareholding reached 4 million kilowatts. It is the main power plant and insurance provider in the region, and the number of hours used and electricity prices are relatively guaranteed. The synergy effect of the company's coal and electricity is evident. The gross profit of coal decreased by 2,135 billion yuan in 2023, but the power sector increased by 2,866 billion yuan. The high gross profit margin of coking coal continued to be compounded by a decline in fuel and coal prices, and the gross margin of the electricity sector rebounded. The company's operation is steady, and its performance is highly resilient to risks.
The transformation project is progressing steadily. According to the company's transformation and development plan, the company is committed to becoming a leading enterprise in the development of the entire industry chain of the energy storage industry. On the basis of the formed basic structure and layout of the entire vanadium liquid flow battery industry chain, it is progressing in an orderly manner the first phase of the 3,000 tons/year high-purity vanadium pentoxide metallurgical selective production line and the first phase of the 300MW/year new-generation high-capacity all-vanadium liquid flow battery production line, which is expected to be put into operation in the fourth quarter of 2024; the company's vanadium battery products have completed the finalization of electric stack products, self-developed BMS program testing, and energy storage module assembly and finalization; It will become the second growth pole for the company's development.
Investment advice
The company's 2024-2026 EPS is expected to be 0.11\ 0.12\ 0.13 yuan, corresponding to the company's closing price of 1.36 yuan on April 29, and the 2024-2026 PE is 12.1\ 11.5\ 10.3 times, respectively. Considering the continued high gross margin of the company's coking coal business and the improvement in profits in the electricity sector, it is expected that there is still room for growth in performance, and it will continue to be given a “holdings increase-A” investment rating.
Risk warning
Risk of macroeconomic growth falling short of expectations; risk of coal prices falling short of expectations; risk of production safety; risk of electricity prices; risk of petrochemical trade caused by fluctuations in international crude oil prices, etc.