Core views:
Q2 performance increased significantly from month to month, and the plan to repurchase shares for 150 to 300 million yuan showed confidence. On June 27, the company announced a pre-increase in performance. It is expected that 24H1 will achieve net profit of 1,16-1.26 billion yuan, +14.54%-24.41% year-on-year, after deducting non-net profit of 11.1 to 1.21 billion yuan, and +10.46%-20.41% year-on-year.
Among them, it is expected to achieve net profit of 693-793 million yuan in the second quarter, +16.74%-33.58% year-on-year, and +48.60%-70.03% month-on-month. On June 26, the company announced that it plans to repurchase shares for 150 to 300 million yuan. The amount to be repurchased accounts for 0.36-0.71% of the total share capital, demonstrating confidence in long-term development.
The coal-power joint venture guarantees steady operation. The Haizetan project is progressing rapidly, and long-term profit flexibility for thermal power can be expected. According to the announcement of the action plan to improve quality, efficiency, and return, the 24Q1 company's complementary advantages of coal and electricity were highlighted. Net profit to mother was +11% compared to the same period, and net profit after deducting non-net profit was +12%. The company's coal production and sales volume is expected to reach more than 12 million tons in 24, reduce costs and expenses by more than 5%, generate more than 375 billion kWh, and guarantee profit growth through Changxie coal cashout and peak-shifting assistance. The Haizetan coal mine is expected to have coal production conditions in 26Q3 and be put into operation in '27. After the production capacity of 10,000 tons per year is fully released, it is expected to achieve 100% fuel self-sufficiency. According to our estimates, it is expected to reduce electricity costs by about 0.09 yuan.
The entire vanadium liquid flow energy storage industry chain was integrated, and production was gradually put into operation in 24Q4. According to the action plan announcement, the company acquired Huihong Mining to deploy 1,58,900 tons of high-quality vanadium pentoxide resources, and acquired 70% of Vnergy's shares to hold core patents. The 24Q4 phase I 3,000 tons/year high-purity vanadium pentoxide and 300MW liquid flow battery production lines will be put into operation one after another.
Financing capacity has been restored, and the size of debt continues to decline. According to the plan announcement, the principal balance of interest-bearing debt as of the end of 23 billion yuan was 41.1 billion yuan, a sharp decrease from before the restructuring. The 24Q1 balance ratio and financial expense ratio fell to 51.52% and 6.75%, respectively, and the company's financing capacity and reporting quality were gradually restored.
Profit forecasting and investment advice. EPS is expected to be 0.12/0.13/0.14 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.