Stable performance, maintaining a high dividend of 60% for 23 years. 1) 23-year performance: In '23, the company achieved net profit of 1708.7/21.24 billion yuan, +2.4%/-39.7% year-on-year, deducted non-net profit of 24.68 billion yuan, -16.9% year-on-year, and loss of 4.65 billion yuan due to fair value changes mainly caused by transactional financial assets. In '23, the company plans to pay a cash dividend of 1.315 yuan (tax included) per share, with a dividend ratio of 60%, corresponding to a dividend rate of 5.2% based on the closing price on April 25. 2) 24Q1 performance: 24Q1 obtained revenue/net profit of 4.65 billion yuan, -9.7%/-32.7% year-on-year, after deducting non-net profit of 5.35 billion yuan, -26.3% year-on-year. Non-profit and loss were mainly fair value changes of -9.2 billion yuan.

Self-produced coal increased and decreased in 23, and production continued to grow in 24Q1. 1) Year 23: The company's commercial coal production/self-produced coal sales in '23 was 164/164 million tons, +4.1%/+5.3% year-on-year, mainly due to the gradual release of production after the company's production capacity increased. By the end of 23, the company's approved production capacity reached 162 million tons, and production is expected to increase steadily in '24. The company's coal is all sold in Kengkou. The average sales price for 23 years was 596 yuan/ton, -13% year-on-year, and the unit cost was 256 yuan/ton, +7.5% year-on-year. The average sales price of self-produced coal was 575 yuan/ton, -14% year-on-year, and the full cost of the original coal preparation unit was 297 yuan/ton, -7.1% year-on-year, of which production safety costs/material costs/maintenance and repair costs/external commission operating costs/related taxes were +52%/-28%/-25%/-23%/-13%. 2) 24Q1:

24Q1 The company's commercial coal production/self-produced coal sales volume was 4145/40.91 million tons, +1.5%/+1.2% year-on-year, and self-produced coal sales continued to grow; total commercial coal sales volume was 61.47 million tons, +9.2% year over year.

Focus on the development of the main business, and there is plenty of potential for dividends. By the end of '23, the company had a total cash balance of 38.2 billion yuan, with total financial assets measured at fair value of 18.5 billion yuan, including 7.9 billion yuan for private equity funds (including 7.3 billion yuan for Suzaku), 7.3 billion yuan for stocks (including 1.65 billion yuan for Longji Green Energy and 4.25 billion yuan for Salt Lake), and 1.1 billion yuan for shares in unlisted companies. Beginning in '23, the company proposed a strategy to focus on the main business. It is expected that this part of the investment scale will gradually shrink in '24. At the same time, the company's net operating cash flow for 23 years was 38.6 billion yuan. Although it is down from about 50 billion yuan in 21/22, it still has strong profitability. Currently, the company promises a cash dividend ratio of no less than 60% of the distributable profit achieved in the same year for the year. Considering that the company has limited projects under construction, the potential to increase future dividends is sufficient.

Profit forecasting and valuation. We believe that with the coal price center moving downward, the company's coal production is increasing steadily, and there is still some room for cost reduction and efficiency. At the same time, the gradual contraction of the secondary market exposure is expected to reduce investment losses. The company's net profit from 24 to 26 is 221.4/217.7/21.38 billion yuan, corresponding to EPS of 2.28/2.25/2.2 yuan, respectively. Referring to comparable companies, it is 12 to 14 times PE in 2024, corresponding to a reasonable value range of 27.41 to 31.97 yuan, maintaining a “superior to the market” rating.

Risk warning. Downstream demand fell sharply; investment returns were drastically lost.