Incident: Recently, the company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 61,475 billion yuan, +3.48% year over year; net profit attributable to mothers/net profit deducted from non-mother was 51.73/5,541 billion yuan, or -54.37%/-49.95% YoY. In the first quarter of 2024, the company achieved operating revenue/net profit to mother of 100.41/807 billion yuan respectively, which was -49.44%/-73.15% year-on-year, respectively.
The decline in coal prices has led to a decline in coal business revenue and profits. The approval of the Malang coal mine in 2024 is expected to further increase coal production and sales. In 2023, the company's coal business revenue was 14.725 billion yuan, -3.24% year on year, achieving a gross profit margin of 34.68%, or -9.53pct year on year. In terms of production and sales, the company continued to do a good job of stabilizing regional coal production and supply, releasing advanced coal production capacity in an orderly manner. In 2023, it achieved 2231.29/4.058 million tons of raw coal/upgraded coal production, respectively, +9.13%/+12.21%, respectively, and achieved sales of raw coal/upgraded coal of 258831/5.115 million tons, respectively, +13.30%/+32.45%. In terms of price, the supply and demand situation in the coal market improved in 2023. Coal storage in the main social sector was at a high level, and the overall coal center declined. In 2023, the company's comprehensive coal sales price was 475.07 yuan/ton, -16.64% over the same period last year. The company is speeding up the development and construction of the Malang coal mine, the expansion of production capacity in the Eastern Mining Area. Among them, the construction of supporting facilities for the Malang coal mine has been basically completed and is currently being processed. The safety approval report on September 21, 2023 has been reported to the State Mine Safety Supervision Administration for approval, and an empty area prospecting license was obtained on November 3. It is expected that it will complete the relevant procedures and contribute to the main increase in the coal business this year.
The fall in international natural gas prices has put pressure on the gross margin of the natural gas business, and the trial operation of the 6#20 10,000 square storage tank has strengthened LNG turnover capacity. In 2023, the company's natural gas business revenue was 38.365 billion yuan, +11.32% year over year, achieving a gross profit margin of 8.11%, or -12.76pct year on year. In terms of production and sales volume, self-produced gas achieved LNG production of 580 million square meters in 2023, which was mainly affected by steam boiler wheel inspection. Outsourced gas companies coordinated international resources such as long-term agreements, short agreements, and spot stocks to expand their business scale. In 2023, the company achieved a total natural gas sales volume of 8.684 billion square meters, +30.99% over the same period last year. In terms of price, the fundamentals of supply and demand in the global natural gas market tend to be relaxed in 2023. Natural gas prices in major markets fell sharply year on year. The average sales price of the company's natural gas in 2023 was 4.42 yuan/square meter, -15.01% year-on-year.
On April 10, 2024, the 6#20 10,000 square storage tank at the LNG terminal in the Lusi Port area of Jiangsu Nantong Port entered the trial operation stage, while the turnover capacity of the 2 #泊位建设项目已编制完成工可报告，公司LNG terminal was further improved.
Profit forecast: According to the company's latest operating conditions, adjust the company rating to “increase holdings”. We expect the company to achieve operating income of 643.67/693.44/76.623 billion yuan in 2024-2026, and achieve net profit of 55.81/64.67/7.924 billion yuan, corresponding PE of 8.53x/7.36x/6.01x.
Risk warning: Changes in the macroeconomic situation at home and abroad have exceeded expectations, the process of projects under construction has fallen short of expectations, commodity prices have fluctuated sharply, downstream demand has fallen short of expectations, and profit forecasts and valuation models have fallen short of expectations