The company released the 2023 annual report and the 2024 quarterly report: in 2023, the company achieved operating income of 17.872 billion yuan, +2.41% year over year; net profit to mother of 21.239 billion yuan, or -39.67% year on year; net profit after deducting non-return to mother of 24.68 billion yuan, -16.89% year over year. In the first quarter of 2024, the company achieved operating income of 40.449 billion yuan, -9.73% year-on-month, -6.88%; net profit to mother of 4.652 billion yuan, -32.69% year-on-year, -8.06% month-on-month; net profit without return to mother of 5.354 billion yuan, -26.33% year-on-year and -5.81% month-on-month.
Production and sales increased year-on-year in '23, and cost control continued to be strengthened, but declining prices dragged down gross profit:
1) In terms of production and sales volume: In 2023, the company achieved coal production of 164 million tons, +4.10% year on year; coal sales volume was 253 million tons, +12.60% year over year, of which trade coal sales volume was 90 million tons, +29.0% year over year. 2) Price aspect: During the reporting period, the sales price of a ton of coal of the company was 596.10 yuan/ton, -13.04%; the price of trade coal was 635.56 yuan/ton, -12.03%; 3) In terms of cost, the company disclosed that the full cost of the original coal preparation unit was 296.59 yuan/ton, -7.14% compared with the same period last year, including material costs, maintenance and repair costs, external operating expenses, and related taxes. The calculated unit cost of self-produced coal was 256.25 yuan/ton, +7.52% over the same period last year.
4) In terms of gross profit: Gross profit per unit of self-produced coal was 318.27 yuan/ton, -26.29% year-on-year.
Production and sales continued to grow in 24Q1, with monthly production and sales exceeding 15 million tons in March: in the first quarter of 2024, the company's coal production was 41.4547 million tons, +1.49% year over year; coal sales volume was 61.463 million tons, +9.16% year over year, of which 15.11 million tons of self-produced coal were sold, +1.17% year over year.
Non-main business changes affected net profit: In 2023, the company's investment income was 2,470 billion yuan, and the profit and loss from changes in fair value accounted for -5.04% of total profit. The main reasons were: 1. Investment income decreased by 83.04% year on year, mainly due to the increase in investment income in the previous period due to the accounting changes of Yulongji Green Energy in the previous period; 2. Profit and loss from changes in fair value of trust assets decreased 10.91% year on year, mainly due to a decrease in profit and loss from changes in fair value of trust assets.
High dividends continue. According to the company's announcement, the company's 2023 profit distribution plan is to distribute a cash dividend of 13.15 yuan (tax included) to all shareholders for every 10 shares, a total cash dividend of 12.749 billion yuan (tax included), with a dividend ratio of 60.03%, which is basically the same as in 2022. As of the close of trading on April 26, the corresponding dividend rate was 5.25%. Looking back, the company's 2024 capital expenditure plan is 2,333 billion yuan, a reduction of 48.43% compared to the total capital expenditure for 2023. As of the end of the first quarter of 2024, the company's balance ratio was 34.01% and the interest-bearing debt ratio was 2.24%, all of which were further reduced compared to the end of 2023. Steady operating performance, gradual reduction in capital expenditure, and effective control of debt burdens have brought stable and abundant cash flow to the company, and future dividend potential is worth looking forward to.
Investment advice: Buy-A investment rating. We expect the company to achieve operating income of 158.791 billion yuan, 159.174 billion yuan and 161,399 billion yuan respectively in 2024-2026, with growth rates of -7.1%, 0.2% and 1.4% respectively; net profit of 21.931 billion yuan, 22.444 billion yuan, and 23.637 billion yuan respectively, with growth rates of 3.3%, 2.3% and 5.3% respectively. The company is located in Shaanxi, with excellent coal resource location, good quality, and an advantage in the cost of a ton of coal. The “nuclear addition+acquisition” in 2022 helped the company achieve a significant increase in immediate coal production and future resource reserves, while the high dividend policy established long-term investment value. For 2024 12.5xPE, the corresponding 6-month target price is 28.25 yuan.
Risk warning: Risk of macroeconomic cycle fluctuations, coal price fluctuations, production safety risks, environmental risks, integration risks, capacity release falling short of expectations, prospecting rights development progress falling short of expectations, performance prediction model errors exceeding expectations, equity investment loss risk, and dividend ratio falling short of expectations.