Key points of investment:
24Q1 net profit to mother -25% year-on-year. The 24Q1 company achieved operating income/net profit of 173.2/1.59 billion yuan, -8.8%/-24.7% year-on-year. The decline in performance was mainly due to a sharp drop in coal sales volume and price.
In 24Q1, the company's coal sales volume and price fell sharply, but the cost reduction results led to a significant increase in gross margin. 1) Production and sales volume:
24Q1 The company's commercial coal product/export sales volume was 524/4.03 million tons, -7.7%/-21.1% year-on-year. On a month-on-month basis, production and sales were basically flat. 2) Price: The comprehensive sales price of commercial coal in 24Q1 was 1,176 yuan/ton, -15.2%/+14.7% YoY. 3) Cost: 24Q1 unit comprehensive cost 593 yuan/ton, -17%/+22.9% YoY. 4) Gross profit: 24Q1 coal business gross profit margin of 49.6%, +1.1/-3.4pct month-on-month.
The gross profit of the 24Q1 coal business was 2.35 billion yuan, -31.6%/+7.2% YoY.
24Q1 coke profits improved year over year, and the ethanol project will contribute to profits. 1) Coke: 24Q1's coke production/sales volume was 88/860,000 tons, +0.1%/-0.3% YoY, -16%/-16.5%. The average sales price was 2,312 yuan/ton, -13.8%/-0.4% YoY. The average purchase price of raw coal was 1,793 yuan/ton, -17.2%/+3% month-on-month. Double coke price difference (= average sales price of coke - 1.3 * average purchase price of coking coal) - 20 yuan/ton, the same as the previous month, +113/-78 yuan/ton. 2) Methanol: The 24Q1 company's methanol production/sales volume was 91/81,000 tons, -42.6%/-46.2% YoY, and -47.1%/-50% month-on-month, due to declining production and sales volume or poor profitability.
The average sales price was 2,162 yuan/ton, -4.4%/+2.7% YoY. 3) Ethanol: The company's 600,000-ton ethanol project was tested at the end of 2023.
There are plenty of projects under construction, and there is room for growth to be expected. 1) Thermal power: The company plans to invest in the construction of a 2×660MW ultra-supercritical coal-fired generator project in Huaibei City, Anhui Province (80% equity ratio). The total investment of the project is expected to be 5.26 billion yuan, the construction period is 30 months, and the total annual profit is expected to reach 196 million yuan after commissioning. 2) Coal: Construction of the Taohutu mine in '23 (production capacity 8 million tons, equity ratio 38%) was being accelerated, and the project progress reached 8.6% by the end of '23. 3) Chemical industry: 100,000 tons/year DMC project under construction, coke oven gas fractionation deep utilization project (251 million Nm? LNG per year) and the carbonate project (30,000 tons/year) are expected to be put into operation in October '24, March '25, and June '25, respectively. The company focuses on the five major directions of upgrading the main coal industry, extending high-end chemicals to new materials, new energy, new construction, and smart logistics, and is expected to become a first-class energy and chemical demonstration enterprise in China.
Profit forecasting and valuation. We believe that the company's coal business is steady, with abundant growth in new business, and strong growth. We expect the company's net profit to be 63.2/77.3/8.35 billion yuan and EPS of 2.35/2.87/3.1 yuan. According to comparable company valuations, the company will be given 9 to 10 times PE in 24 years according to the PE valuation method, corresponding to a reasonable value range of 21.11 to 23.45 yuan, maintaining a “superior to the market” rating.
Risk warning. Demand fell sharply, and the commissioning of new construction projects fell short of expectations.