Event: The company released its 2023 annual report and 2024 quarterly report. For the full year of 2023, we achieved operating income of 30.12 billion yuan, -15.3% year over year; realized net profit of 2.27 billion yuan, +18.7% year over year. In the first quarter of 2024, we achieved operating income of 7.32 billion yuan, +3.6% year on year; realized net profit to mother of 410 million yuan, +11.4% year over year.
The market price of coking coal fell, and the company's coal business revenue and profit declined in 23 years, and growth is expected to resume in 24. Two 600,000-ton coal mines in Gujiao fully resumed production in the first half of '23. The company sold 12.99 million tons of coal in '23, +18% compared to the same period in '22. The price of coking coal fell rapidly in the first half of '23. Although prices rebounded in the second half of the year due to the impact of the coal mine safety accident, the average price for the whole year still fell by about 18% compared to '22, and the company's coal business revenue and profit declined.
The price of coking coal continued to rise in 1Q24, but compared to -12% year on year, the company's coal business revenue and profit in the first quarter still declined year on year. Supply and demand for coking coal are expected to remain tight in 24, and the company's coal business profit is expected to resume growth throughout the year.
Electricity prices remained high, coal prices fell, and the profitability of the electricity business increased. In '23, the company added 200,000 kilowatts of installed power, completing the feed-in capacity of 35.4 billion kilowatt-hours, +4.10% year-on-year; the average feed-in price was 0.4748 yuan/kilowatt-hour, +1.2% year-on-year. The thermal coal market price declined markedly in '23, and the average price for the whole year fell 24% year-on-year compared to '22. The increase in electricity volume and electricity prices resonated with the decline in coal prices. The company's electricity business had a gross profit margin of 10.68% in '23, an increase of 17.55pct over '22, driving the company's performance growth. 1Q24 completed the feed-in electricity volume of 9.5 billion kilowatt-hours, +14.23% year-on-year; the average feed-in price was 0.4714 yuan/kilowatt-hour, which remained high.
The Haizetan project progressed steadily, and the energy storage project was put into operation during the year. The construction of the company's Shaanxi Yihua Haizetan coal mine project is progressing steadily. It is expected that the conditions for coal production will be in place in 2026, and the scale and profitability of the company's coal business will be greatly enhanced after production is reached in 2027. In terms of energy storage, the upstream 3,000 tons/year high-purity vanadium pentoxide metallurgical preparation production line and the downstream 300MW all-vanadium liquid flow battery energy storage equipment manufacturing base are all expected to be put into operation within 24 years.
This is the first dividend since 2017, with a total discovery bonus of 122 million yuan. The company announced its 23-year profit distribution plan, stating that it will distribute a cash dividend of 0.055 yuan per share, for a total of 122 million yuan in cash dividends.
Since the beginning of '24, the price decline in the coking coal market has been higher than our previous expectations. We have lowered our annual coking coal market price forecast, adjusted the company's net profit forecast for 24-26 to 27.71/30.27/3.285 billion yuan (the original 24-25 forecast was 28.23/3.192 billion yuan), and net assets per share for 24-26 were 2.21/2.34/2.49 yuan. Referring to comparable companies, we maintain the company's 2024 PB valuation of 0.9 times, corresponding to a target price of 1.99 yuan, and maintain an “gain” rating.
Risk warning
The risk of price fluctuations in the coking coal market; the risk of rising fuel costs for power generation; the risk that the energy storage business will fall short of expectations.