Incident: Yongtai Energy announced the 2024 semi-annual performance pre-increase, the 2024 “Improve Quality, Efficiency and Value Return” action plan announcement, and an announcement on the plan to repurchase the company's shares through centralized bidding transactions. The company expects to achieve net profit attributable to shareholders of listed companies in the first half year of 2024 of 1,160 million yuan to 1,260 million yuan, an increase of 14.54% to 24.41% over the previous year. In 2024, the company will carry out share repurchases for employee stock ownership plans or equity incentives, and the repurchase capital will remain in the 150-300 million yuan (inclusive) range.

Coal business: Intensive production ensures production and accelerates construction of key projects.

The company's Haizetan coal mine had coal production conditions in the third quarter of 2026 and reached production in 2027. Finally, it achieved the construction target of “three and a half years, completed and put into operation in four years”. The construction cycle was 2 to 3 years ahead of the same type of mine in Shaanxi and Mongolia. After the Haizetan Coal Mine fully releases production capacity, the company's operating income will reach 39.12 billion yuan, net profit of 6.905 billion yuan, and net operating cash flow of 12.125 billion yuan, which will become the company's new profit pillar.

Electricity business: Profitability continues to improve. Various measures to promote performance benefit from thermal coal prices being within a reasonable range, and through effective measures such as full coverage of Changxie Coal contracts, increasing the cash out rate of Changxie Coal, generating electricity and multiple heating, and participating in peak-shifting auxiliary services, the company's power business operating efficiency continues to improve. The company plans to generate more than 37.5 billion kilowatt-hours of electricity for the year 2024. The above measures will become a new profit growth point for the company and further enhance the company's overall operating performance.

Energy storage business: Resources and technology coexist to accelerate the formation of new quality productivity.

The energy storage industry of the entire vanadium liquid flow battery industry chain will take shape in 2025, and the goal of more than 30% of the all-vanadium liquid flow battery market share will be achieved from 2027 to 2030. Currently, the company has more than 10 related patented technologies and has acquired 70% of the shares of Vnergy, an all-vanadium liquid flow battery energy storage technology startup; the first self-developed 32kW vanadium battery stack was manufactured and successfully tested in March 2023, and the 1MW test production line was put into use in June 2023. At the same time, the company's largest single domestic high-purity vanadium pentoxide metallurgical production line, the first phase of the 300MW/year production line for a new generation of high-capacity, long-term all-vanadium liquid flow batteries and related products began construction in June 2023. It is expected that they will be put into operation one after another in the fourth quarter of 2024 to achieve results, and accelerate the formation of new quality productivity. After delivery, the two first-phase production lines will occupy about 20% of the current domestic market share of coal and vanadium and about 10% of the total vanadium liquid flow battery market share, further enhancing the company's competitiveness within the industry.

Dividends and share repurchases: Implementing a continuous dividend mechanism, equity incentives enhance core competitiveness, and the company formulated a 2023 annual profit distribution plan to distribute a cash dividend of 0.055 yuan (tax included) to all shareholders; as of December 31, 2023, the total share capital of the company was 22,217,764,145 shares, which is used to calculate the total proposed discovery dividend of 122,197,702.80 yuan. The company plans to use its own funds to repurchase some RMB common stock (A shares) shares already issued by the company to implement employee stock ownership plans or equity incentives. If all of the repurchase funds are used up according to the maximum limit of RMB 300 million (inclusive), the repurchase amount will account for 0.28% and 0.65% of the total assets of the company and the net assets belonging to shareholders of the listed company, respectively, accounting for a small share. Therefore, this buyback will not have a significant impact on the company's operations, finance, R&D, profitability, debt performance, and future development.

Profit forecasting and valuation

We expect the company to achieve net profit of 2.488/2.872/3.047 billion yuan in 2024-2026, a year-on-year increase of 9.8%/15.44%/6.09%; EPS is 0.11/0.13/0.14 yuan, corresponding PE is 10.54/9.13/8.6 times, maintaining the “gain” rating.

Risk warning

The decline in coal prices exceeded expectations; coal production fell short of expectations; the progress of the vanadium liquid flow battery project fell short of expectations