Incident Overview: The company recently released its quarterly report for '24 and its annual report for '23. 24Q1 achieved operating income of 39.633 billion yuan, a year-on-year decrease of 20.76%; net profit to mother was 3.757 billion yuan, a year-on-year decrease of 41.85%. In 2023, the company achieved revenue of 150,025 billion yuan, a year-on-year decrease of 33.31%; net profit to mother was 20.040 billion yuan, a year-on-year decrease of 39.62%; after deducting non-net profit of 18.591 billion yuan, a year-on-year decrease of 38.61%.
The volume and price of coal fell sharply in '23, and the volume rose and fell in 24Q1. In 2023, the company produced 132 million tons of commercial coal, up 0.6% year on year; sales volume was 12,700 tons, down 6.2% year on year. The comprehensive sales price was 803 yuan/ton, down 25.5% year on year; gross profit margin was 51.7%, down 7.93 pct from '22. In 24Q1, the company produced 34.64 million tons of commercial coal, up 15.43% year on year; sales volume was 34.18 million tons, up 7.11% year on year; comprehensive sales price was 727 yuan/ton, down 29.2% year on year.
Coal chemical production and sales increased in '23, and sales declined slightly in 24Q1. The output of coal chemical products in '23 was 8.587 million tons, up 9.0% year on year; sales volume was 7.888 million tons, up 7.6% year on year; revenue was 26.398 billion yuan, up 0.2% year on year; gross profit margin was 19.95%, down 1.23 pct year on year. In 24Q1, coal chemical product output was 2.164 million tons, up 1.8% year on year; sales volume was 1.881 million tons, down 3.6% year on year; revenue was 6.258 billion yuan, down 4% year on year.
Coal production is expected to increase by 6.1% in 24, and there is plenty of room for medium- to long-term production growth. In 2024, the company plans to produce about 140 million tons of commercial coal, an increase of 6.1% over the previous year. Wanfu Coal Mine (1.8 million tons/year) and Wucaiwan No. 4 Coal Mine (10 million tons/year) are scheduled to be put into operation in 2024/2025, respectively. According to the company's “Outline Development Strategy”, in the future, the scale of coal production will reach 300 million tons/year in 5-10 years, and there is plenty of room for medium- to long-term production growth.
The dividend rate is 55%, and the dividend rate is 6.5%. In '23, the company plans to pay a cash dividend of 1.49 yuan (tax included) per share, with a dividend rate of 55%. Based on the closing price on April 29, the dividend rate for A shares is 6.5%.
Investment advice: We expect the company's revenue in 2024-2026 to be 1510.0/1670.0/175.0.0 billion yuan, 0.65%/10.60%/4.79% year on year; net profit to mother of 196.6/205.4/21.68 billion yuan, or -2.37%/4.49%/5.51% year on year; PE 8.63/8.26/7.83 times. Considering that the company has a lot of room to increase production capacity, the Australian coal mine has high profit flexibility when overseas coal prices rise, giving it a “buy” rating.
Risk warning: the decline in coal prices exceeded expectations; additional production capacity fell short of expectations; production safety risks.