Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 192,969 billion yuan, a year-on-year decrease of 12.52%; realized net profit to mother of 19.534 billion yuan, an increase of 6.98% over the previous year, with basic earnings of 1.47 yuan per share.
Among them, Q4's revenue in a single quarter was 36.76 billion yuan, down 18.73% year on year, down 21.54% from Q3's 46.852 billion yuan; net profit to mother was 2,846 billion yuan, up 366.32% year on year, and down 41.36% from Q3's 4.853 billion yuan. In 2024Q1, revenue was 45.395 billion yuan, down 23.27% year on year; net profit to mother was 4.970 billion yuan, down 30.55% year on year, up 74.63% month on month in 23Q4; basic earnings per share were 0.37 yuan. The results are generally in line with market expectations.
Self-produced coal sales increased, but prices and profits fell. In 2023, the company's coal production was 134 million tons, up 12.61% year on year; coal sales were 285 million tons, up 8.37% year on year; comprehensive coal sales price was 569.31 yuan/ton, down 21.35% year on year.
In terms of coal production, sales volume was 134 million tons, up 11.28% year on year; price was 602 yuan/ton, down 15.9% year on year; cost was 307.01 yuan/ton, down 4.9% year on year; gross profit was 294.99 yuan/ton, down 24.97% year on year, gross profit margin was 49.00%, down 5.91 pct year on year. Coal production in 24Q1 was 32.73 million tons, down 1.7% year on year. In terms of coal production, sales volume was 32.31 million tons, down 0.8% year on year; average sales price was 598 yuan/ton, down 10.9% year on year; cost was 290.97 yuan/ton, up 7.8% year on year; gross profit was 307.03 yuan/ton, down 22.94% year on year; gross profit margin was 51.3%, down 8 pct year on year.
Sales of coal chemical products increased, and gross profit continued to improve. In 2023, the company achieved sales volume of polyolefins of 14.79 billion tons, up 0.68% year on year; average sales price was 6,907 yuan/ton, down 6.7% year on year; cost 6,375 yuan/ton, down 7.4% year on year; gross profit of 532 yuan/ton, up 2.9% year on year; gross profit ratio of 7.7%, up 0.72 pct year on year. 24Q1 achieved sales volume of polyolefins of 3.73 billion tons, up 2.19% year on year; average sales price of 6848 yuan/ton, down 2.9% year on year; cost 5899 yuan/ton, down 5.8% year on year; gross profit of 949 yuan/ton, up 19.5% year on year, gross profit margin of 13.86% year on year, up 2.61 pct year on year.
Financial expenses have dropped significantly. The company's expenses for the 2023 period were 10.413 billion yuan, a year-on-year decrease of 2.45%. Among them, management expenses were 5.452 billion yuan, up 3.92% year on year, mainly due to depreciation, amortization and tax increases; sales expenses were 1.05 billion yuan, up 13.00% year on year; financial expenses were 2,995 billion yuan, down 19.66% year on year. Interest expenses decreased due to reduced borrowing. R&D expenses increased 18.76% year over year to 916 million yuan. The total cost for the 24Q1 period was 2.210 billion yuan, up 1.94% year on year. Among them, management expenses were 1,271 billion yuan, up 17.60% year on year; sales expenses were 165 million yuan, down 24.13% year on year; financial expenses were 653 million yuan, down 12.09% year on year; and R&D expenses were 121 million yuan, down 4.46% year on year.
Projects under construction are progressing steadily, creating a dense industrial chain of “coal-coal electricity-coal chemical-new energy”. The Dahaize Coal Mine (20 million tons/year) passed the completion inspection, and the East Open Pit Mine and Anjialing Coal Mine received approval for a nuclear increase of 10 million tons/year, and construction of the Libi Coal Mine and Weizigou Coal Mine progressed steadily. The Antaibao 2 x 350,000 kilowatt low calorific value coal power generation project has entered the final stage, and the Wushenqi 2 x 660,000 kilowatt coal power integration project has been approved and voting has been completed. Construction of the second phase of the Yulin Coal Chemical Project with an annual output of 900,000 tons of polyolefins is about to begin, and the “Liquid Sunshine” project has been voted on.
Investment analysis: Due to the impact of imported coal, coal prices have declined, and the company's profit in the coal sector has declined. Therefore, we lowered the company's net profit forecast for 2024 from 26.901 billion yuan to 19.837 billion yuan, and added 2025-2026 profit forecasts of 20.351 billion yuan and 20.887 billion yuan. The current market capitalization corresponds to 24-26 PE of 8.2X, 8.1X, and 7.8X respectively. Comparable companies China Shenhua, Shaanxi Coal, and Yankuang Energy had an average PE of 11.2 times in 24 years. The company had a 35% discount compared to the average PE of comparable companies, maintaining the company's “buy” rating.
Risk warning: The macroeconomy declined beyond expectations, downstream demand fell sharply, and the company's sales volume declined sharply.