Incident: Recently, the company issued an announcement: 1) 2024 semi-annual performance forecast; 2) The company formulated the “Yongtai Energy Group Co., Ltd. 2024 “Improving Quality, Efficiency, and Heavy Return” Action Plan (“Action Plan”); 3) The company plans to repurchase the company's shares to implement employee shareholding plans or equity incentives.

Based on coal and electricity, business performance is expected to continue to improve. In terms of coal, the company has abundant reserves of resources. It mainly produces high-quality coking coal and coking coal, which are scarce types of coal. The annual production capacity exceeds 12 million tons, and maintains a high gross profit level. In terms of electricity, the company's thermal power installations are mainly concentrated in Henan and Jiangsu. They are the main local power supply plants. Electricity demand is stable. Under measures such as seizing power generation, increasing the cash flow rate of Changxie coal, and improving peak shifting capacity, there is still room for improvement in the profitability of the company's power business. 1H24 expects to achieve net profit attributable to shareholders of listed companies of 1,160 million yuan to 1,260 million yuan, an increase of 14.54% to 24.41% over the previous year. The performance growth is in line with our expectations.

Accelerating construction of the Haizetan project is expected to drive performance growth. The first phase of the Shaanxi Yihua Haizetan Coal Mine Project, which belongs to the company, has come to an end, and construction of the second phase of the project has begun. It is expected that the conditions for coal production will be in place in the third quarter of 2026, and production will be reached in 2027. After production is put into operation and production capacity is fully released, according to the “Action Plan”, the company expects additional revenue of about 9 billion yuan, additional net profit of about 4.4 billion yuan, and additional net operating cash flow of about 5.1 billion yuan.

Energy storage is the wing, and the entire vanadium liquid flow battery industry chain layout. The company has 1.5889 million tons of high-quality vanadium pentoxide resources, with outstanding upstream resource advantages. The 3,000 tons/year high-purity vanadium pentoxide metallurgical production line is expected to be put into operation within the year, and it is expected to occupy about 20% of the current domestic market share for coal and vanadium extraction. On the downstream side, the company's 300MW/year all-vanadium liquid flow battery and related product production line is expected to be put into operation in the fourth quarter, which will account for about 10% of the all-vanadium liquid flow battery market share.

Management increased its holdings and repurchased shares, demonstrating confidence. The sixth increase in the company's management holdings has been completed. In this round, the company's stock holdings were increased by a total of 13,754,000 shares, accounting for 0.0619% of the company's total shares. Also, according to the announcement, the company plans to repurchase 0.15 billion yuan to 0.3 billion yuan of shares to implement employee stock ownership plans or equity incentives, and take more measures to show confidence.

We expect the company's 24-26 net profit of 2.771/3.027/3.285 billion yuan, and earnings per share of 0.12/0.14/0.15 yuan. Referring to comparable companies, we gave the company an 11-fold PE valuation in 24 years, corresponding to a target price of 1.32 yuan, maintaining the “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.