Due to coal price adjustments, performance declined year-on-year

According to the company's 2024 semi-annual report, 2024H1's revenue was 5.985 billion yuan, -4.40%; net profit to mother was 1.176 billion yuan, -10.11%; net profit after deducting non-return to mother was 1.138 billion yuan, -11.57% year over year; and net operating cash flow was 1.755 billion yuan, -10.24% year over year. We believe that the decline in performance was mainly affected by the fall in coal prices during the off-season.

The coal business is relatively stable, and the price of tons of coal was slightly adjusted month-on-month

2024H1's coal business sales revenue was 5.14 billion yuan, -6.17% year over year, of which foreign sales revenue was 4.02 billion yuan, or -9.75% year over year. 2024H1 raw coal production was 10.379 million tons, -7.65% year on year, commercial coal production was 9.3602 million tons, -4.82% year on year, commercial coal sales were 9.1036 million tons, -10.24% year on year, of which foreign sales volume was 7.1198 million tons, or -13.98% year on year.

Judging from the single-quarter data, the price of 2024Q2 tons of coal was 553.6 yuan/ton, +1.9%, -3.7% month-on-month; the cost per ton was 331.6 yuan/ton, -1.2% YoY, -4.3% month-on-month; gross profit per ton of coal was 222.1 yuan/ton, +6.9% YoY and -2.8% month-on-month.

The power business can be expected to increase in the future

China Coal Xinji Xinfa Electronics Company's 2024H1 revenue was 1.788 billion yuan, +13.8% year over year, and net profit was 0.254 billion yuan, +29.9% year over year. In the first half of the year, the power generation capacity was 4.61 billion kilowatt-hours, +12.41% year over year, and 4.353 billion kilowatt-hours, +12.66% year over year. The average feed-in tariff (excluding tax) was 0.4115 yuan/kwh, +1.28% year over year.

The power plants currently under construction by the company include Lixin Power Plant Phase II (1.32 million kilowatts), Shangrao Power Plant (2 million kilowatts), Chuzhou Power Plant (1.32 million kilowatts), and Lu'an Power Plant (1.32 million kilowatts). The total additional installed capacity is 5.96 million kilowatts, which can be expected to increase.

Profit forecast and valuation: We expect net profit due to mother for 2024-2026 to be 2.22/2.64/3.42 billion yuan, respectively, and corresponding EPS of 0.86/1.02/1.32 yuan, respectively, maintaining a “buy” rating.

Risk warning: the risk of large fluctuations in coal prices; the risk that the return on investment in future power plants will fall short of expectations due to the slowdown in economic development in Anhui or other factors; the risk that thermal power will be squeezed out due to the rapid development of new energy sources in Anhui Province; the risk of projects under construction falling short of expectations.