Event Overview: The company recently released the 2023 Annual Report and the 2024 Quarterly Report. In 2023, the company's revenue was 43.137 billion yuan, down 20.55% year on year; net profit to mother was 7.922 billion yuan, down 44.11% year on year; net profit after deduction was 7.889 billion yuan, down 45.11% year on year. In 2023, Q4 achieved revenue of 10.124 billion yuan, down 29.3% year on year and 9% month on month; net profit to mother was 652 million yuan, down 86.7% year on year, down 67% month on month; net profit after deduction was 647 million yuan, down 87.4% year on year and 67.2% month on month. In 2024, Q1's revenue was 8.659 billion yuan, down 27.19% year on year and 14.5% month on month; net profit to mother was 1,288 billion yuan, down 61.9% year on year, up 97.5% month on month; net profit after deduction was 1,285 billion yuan, down 61.7% year on year, up 98.6% month on month.

The volume and price of coal rose and fell in 23, and coal production may be limited in 24 years. In '23, the company produced 60.4 million tons of raw coal, up 6.2% year on year; sales volume was 54.98 million tons, up 3.9% year on year. The company's commercial coal sales price in '23 was 727 yuan/ton, down 21.8% year on year; commercial coal cost was 348 yuan/ton, down 3.3% year on year. The gross margin of the coal business in '23 was 52.22%, down 9.16 pct from the same period last year. Coal prices continued to decline in 24Q1. Raw coal production in Q1 was 13.24 million tons, down 9.93% year on year; commercial coal sales were 11.81 million tons, down 7.08% year on year. The average price of commercial coal was 689 yuan/ton, down 20.69% year on year; the average cost was 378 yuan/ton, up 7.62% year on year. Affected by stricter inspections in Xi'an, Shanxi, the business target for 24 years is to maintain production at the level of 50 million tons.

Coal accounts for a high share of the market, and performance is highly flexible due to coal prices. The company's share of coal insurance and power is low, and it is mostly sold at market prices. When the price of jet coal rises sharply, the company's profit is expected to show high elasticity.

Cash dividend of $4.753 billion for '23, dividend ratio of 7.5%. In '23, the company plans to distribute cash dividends of 15.89 yuan (tax included) for every 10 shares, with a cash dividend amount of 4.753 billion yuan, and a dividend distribution rate of 60%.

Based on the closing price on April 30, the dividend rate was 7.5%.

Investment advice: We expect the company's revenue to be 441.9/453.2/46.81 billion yuan in 2024-2026, +2.4%/+2.6%/+3.3% year on year; net profit to mother of 80.6/84.5/8.93 billion yuan, +1.7% year on year; EPS is 2.69/2.82/2.98 yuan respectively, corresponding to the current stock price PE is 7.85/7.49/7.08 times. Considering the high share of coal in the company's market, profit elasticity and dividends are high when coal prices rise The rate is high and the “buy” rating is maintained.

Risk warning: the decline in coal prices exceeded expectations; security inspection affected the decline in production; production safety risks.