Description of the event
The company disclosed its 2024 quarterly report. In the first quarter of 2024, the company achieved operating income of 10.041 billion yuan, a year-on-year decrease of 49.44%; net profit attributable to shareholders of listed companies was 807 million yuan, a year-on-year decrease of 73.15%; and net cash flow from operating activities was 1,711 billion yuan, a year-on-year decrease of 20.58%.
Incident comments
Prices of major products have dropped significantly, and 2024Q1 performance is under pressure. Since 2024, the global economic recovery process has been slow. Combined with the effects of high temperatures in the first quarter, inventories in the world's major natural gas consumption regions have remained high, the easing trend of supply and demand has not been effectively improved, and international natural gas prices have continued to fall. The average export price of LNG nationwide in the first quarter was 4451.78 yuan/ton, down 25.05% year on year, and the company's natural gas sales fell 44.12% year on year. Domestic seasonal coal demand was strong, and coal consumption grew steadily year on year. The company sold 9.018,300 tons of coal in Q1, up 1.97% year on year. Against the backdrop of a slight year-on-year decline in national coal production, coal imports maintained a slight year-on-year increase. Overall supply was sufficient, the relationship between supply and demand in the market gradually weakened, and the coal market price center declined. The average price of 5000K thermal coal in Qinhuangdao in the first quarter of 2024 was 798.87 yuan/ton, a year-on-year decrease of 17.76%. Prices of major products declined, and the 2024 Q1 performance decreased by 73.15% year over year.
Key projects are progressing in an orderly manner, and the coal and natural gas business highlights the company's growth attributes. The Malang coal mine is rich in resource reserves, with resource reserves of more than 1.8 billion tons; the overall coal seam is low ash, high volatile content, very low sulfur, very low phosphorus, medium to high calorific value. According to the “Malang Coal Mine Exploration Coal Quality Test Report”, the Malang coal mine mainly contains more than 6,000 kcal of ultra-high quality raw coal, and the coal seam is shallowly buried, mining costs are low, and it has high development and utilization value. The safety approval data for the Malang coal mine has been reported to the State Mine Safety Supervision Administration for approval; the EIA report acceptance form has been submitted to the Ministry of Ecology and Environment and is currently being approved. The company currently owns the Baishihu Coal Mine in production, the Malang Coal Mine under construction and the Dongbu Coal Mine, with total recoverable coal reserves of more than 6 billion tons. In addition, the LNG receiving station and supporting projects are progressing steadily. The 6#20 million cubic meter storage tank entered the trial operation stage in April of this year, 2 #泊位建设项目工安全预评价已通过评审，正在向省交通局申请批复阶段；海洋环评等待上会评审阶段。 In addition, the Green Power hydrogen production and hydrogen energy integration demonstration project was put into trial operation.
With permission to import crude oil, the petroleum business is expected to provide additional growth. The company received the “Notice from the Ministry of Commerce on Issuing the Second Batch of Crude Oil Import Allowances for Non-State Trade in 2024”. At present, the S-1003 well, a new well in the shallow Permian injection well network in the Sarybulak main block of the oilfield has been drilled, and the 1022 well group design revisions and the geological design of the 5 wells in the well group have also been completed. The oil and gas project has entered the trial mining phase to provide additional increments.
Focusing on shareholder returns, a cash dividend of 0.7 yuan was distributed per share, corresponding to the latest dividend rate of 8.8%. The company promises that the cumulative profit distributed to common shareholders in cash from 2022 to 2024 is not less than 90% of the average annual profit that can be distributed to common shareholders in the last three years, and a guaranteed dividend of 0.70 yuan/share (tax included). This time, the company issued the “Notice on the 2023 Profit Distribution Plan”, announcing that it plans to distribute cash dividends of 0.7 yuan/share in 2023. The cash dividend amount will reach 4.547 billion yuan, and the cash dividend ratio will reach 87.90%. Based on the closing price of $7.96 on April 25, 2024, the corresponding dividend rate is 9.56%, which has a high margin of safety.
EPS is expected to be 0.86, 1.01, and 1.17 yuan respectively in 2024-2026, and PE corresponding to the closing price on April 30, 2024 will be 8.57X, 7.34X, and 6.31X, respectively, maintaining a “buy” rating.
Risk warning
1. The price of coal fell sharply; 2. The price of natural gas fell sharply; 3. The release of new production capacity fell short of expectations; 4. The recovery in downstream demand fell short of expectations.