Incident: The company released the 2024 semi-annual operating data announcement. In the first half of 2024, the company achieved main coal sales revenue of 5.137 billion yuan, -6.17% year over year, including foreign sales revenue of 4.018 billion yuan, -9.75% year on year; main coal sales cost 3.086 billion yuan, -7.80% year on year; and gross profit of coal sales of 2.05 billion yuan, or -3.62% year on year.

24H1 coal business volume fell in price, and gross profit performance of tons of coal was impressive: 1) In terms of production and sales: 24H1's raw coal output was 10.379 million tons, -7.65% year on year; commercial coal production was 9.3602 million tons, -4.82% year over year; commercial coal sales volume was 9.1036 million tons, or -10.24% year on year. 2) Price aspect: 24H1's commercial coal unit sold for 564 yuan/ton, +4.53% year-on-year. 3) Cost aspect: The unit cost of 24H1's commercial coal is 339 yuan/ton, +2.72% over the same period last year. 4) In terms of gross profit: 24H1's gross profit per unit of commercial coal was 225 yuan/ton, +7.38% over the same period last year.

24H1 electricity business volume and price increased sharply: According to the company announcement, 24H1's power generation capacity was 4.61 billion kilowatt-hours, +12.41% year over year; feed-in power was 4.353 billion kilowatt-hours, +12.66% year over year; average feed-in electricity price (excluding tax) was 0.4115 yuan/kWh, +0.37% year over year.

Thermal power projects continue to advance, and new energy projects are also in reserve: the company has 4 thermal power projects under construction and preparation. Among them, the second phase of the Panji Power Plant project is scheduled to be completed and put into operation in October 2024; the Shangrao Power Plant Project, Chuzhou Power Plant Project, and the Lu'an Power Plant Project are all scheduled to be completed and put into operation in 2026. After all units are put into operation, the company's thermal power installation will increase from the current 2 million kilowatts to 7.96 million kilowatts. In addition, the company is also developing and reserving new energy resources such as wind power and photovoltaic power generation. Currently, 2 projects have been completed or started:

The 1.57MW distributed photovoltaic power generation project in the company's office park has been completed, and construction of the 5.81 MW distributed photovoltaic power generation project in the Maoji Experimental Zone has recently begun; 3 projects have been approved or registered: the 4.19MW distributed photovoltaic power project in the Maoji Experimental Zone, the 0.1 million kilowatt wind power project in the southern part of Lixin County, and the 0.09 million kilowatt surface photovoltaic project in the collapse area of Xinji Second Mine.

Investment advice: Buy-A investment rating. We expect the company to achieve revenue of 12.555 billion yuan, 13.301 billion yuan, and 15.798 billion yuan respectively in 2024-2026, with growth rates of -2.3%, 5.9%, and 18.8%; net profit of 2.324 billion yuan, 2.507 billion yuan, and 2.893 billion yuan, respectively, with growth rates of 3.6%, 9.2%, and 17.0% respectively. As a listed coal company under China Coal Group, the company has an excellent coal resource location and large reserves. The main type of coal sold is thermal coal, and Changxie accounts for a high share to enhance performance stability. At the same time, thermal power projects under construction or proposed are basically located in or around Anhui Province, and are close to the company's coal mines. Assuming that the performance of all thermal power projects is expected to increase significantly in 2026. At that time, the synergetic advantages of the company's coal and electricity integration will be fully exploited, further improving the company's profitability and resilience to risks, thus it is expected that the coal stock valuation will shift from coal stock valuation to stable asset valuation of coal and electricity integration. The company was given 13.5xPE in 2024, with a target price of 12.15 yuan for 6 months.

Risk warning: Risk of macroeconomic cycle fluctuations, coal price fluctuations, production safety risks, environmental risks, changes in geological conditions affecting the company's coal quality risk, prospecting rights development progress falling short of expectations, thermal power project construction progress falling short of expectations, prediction assumptions and model errors exceeding expectations, risk of declining coal power usage hours, and risk of falling coal and electricity prices.