A leading private integrated energy source, coking coal resources have increased in the medium to long term. The company created a “traditional energy+new energy storage” two-wheel drive pattern, and the completion of the company's restructuring at the end of 2020 ushered in an inflection point in development. The company achieved net profit of 2,266 billion yuan in 23 years, +19% year over year; deducted non-net profit of 2,359 million yuan, +42% year over year, and achieved net profit of 467 million yuan +11% year over year in 24Q1. The company's coal business is operating steadily, with a total production capacity of 17.1 million tons in 23 years, and a long-term growth of 3.8 billion tons of resource reserves.
Capacitive electricity prices characterize the “cornerstone” power supply, and thermal coal self-sufficiency unleashes the profitability of electricity. The company's power generation capacity in '23 was 37.35 billion kWh (+4% YoY), benefiting from the power price policy and falling coal prices. The gross profit of the electricity business in '23 was 1,785 billion yuan, reversing the year-on-year loss. The company's Haizetan coal mine project is expected to produce coal in 26Q3 and reach production in 27 years. After delivery, it is expected to contribute 10 million tons/year of high-quality thermal coal, achieve 100% fuel self-sufficiency, and reduce electricity costs by about 0.09 yuan. The company paid 120 million yuan in dividends for the first time in 23 years. It is expected that coal-fired power generation will grow to more than 375 billion kilowatts in '27. At that time, the profitability of the power business will increase dramatically, which is a solid guarantee for long-term stable dividends.
The integrated card position has full vanadium liquid flow energy storage, and has the potential for comprehensive energy transformation. The company is focusing on building an integrated all-vanadium liquid flow battery industry chain: upstream acquires Huihong Mining to obtain a 6,000-ton vanadium pentoxide production line with high-quality vanadium ore resources; midstream establishes Detai Energy Storage Equipment Company to plan a 1000MW all-vanadium liquid flow battery manufacturing base; and introduces core patents from Changsha Polytechnic and the National University of Singapore to accelerate cost reduction.
According to the first quarterly report, the first phase of the 3,000 tons/year high-purity vanadium pentoxide and 300MW flow battery production line will be put into operation in 24Q4, achieving the second curve of growth. In 22-23, the company's power supply area, Jiangsu/Henan Province, ranked second in the top two of the largest provinces in China that consumed more than 300 billion degrees of electricity. The company's electricity is highly compatible with liquid flow energy storage, laying a good foundation for transitioning to comprehensive energy and increasing electricity profits.
Profit forecasting and investment advice. EPS is expected to be 0.12/0.12/0.14 yuan/share in 24-26. Thermal power profits are expected to release elasticity after thermal coal self-sufficiency. Combined with comparable companies and historical valuation centers, it will maintain a reasonable value of 1.88 yuan/share, and maintain an “gain” rating.
Risk warning. Risk of fluctuations in coal prices; risk of fluctuations in thermal power prices; liquid flow batteries falling short of expectations.