Financial Services Association, August 7 (Reporter Liu Yue) Yongtai Energy (600157.SH), with a total market capitalization of nearly 25 billion yuan, recently launched a protective plate combo punch to attract market attention. Currently, the company is planning to suspend trading on important matters, and stock trading is scheduled to resume on August 8 (Thursday).

The company's net profit reached 2.266 billion yuan last year, and the net profit for the first half of this year is expected to exceed 1.1 billion yuan, achieving year-on-year growth. However, Yongtai Energy's performance growth was not recognized by the capital market. The stock price hovered around 2 yuan in recent years, and fell to 1.1 yuan on July 24. In order to ease concerns about face value delisting, on the same day, the company took countermeasures, planned important matters and suspended trading, increased the amount of shares to be repurchased, changed the purpose of the repurchase, and issued a letter to all shareholders.

A person from Yongtai Energy Company told the Financial Federation reporter, “Market sentiment has a big impact on stock price fluctuations. If the stock price falls to 1.1 yuan, there may be a panic attack. The actual business situation of the company has not been effectively conveyed to the market.”

Is Yongtai Energy being mistaken by emotions? What is the current first-line production situation of Yongtai Energy, which operates in complementary coal and electricity businesses? CIFA reporters bring you first-line coverage.

Power plants “try their best to increase revenue”

Entering the factory area of Shazhou Electric Power Company, a subsidiary of Yongtai Energy, located in Zhangjiagang on the south bank of the Yangtze River, three 200-meter-high chimneys stood majestically. Two of them had “white smoke” rolling outward. According to reports, this “white smoke” has been purified too many times, and the final emission is mainly water vapor.

Currently, Shazhou Electric Power has 2 million-kilowatt supercritical units and 2 0.6 million-kilowatt supercritical coal-fired generators with a total installed capacity of 3.26 million kilowatts, ranking in the top five in Jiangsu Province and second in the Suzhou region. Shazhou Company has an annual power generation capacity of 18 billion kilowatt-hours, an annual heating capacity of 1.3 million tons, and an annual sludge treatment capacity of 0.2 million tons. In 2023, the electricity consumption of the entire society in Suzhou and Zhangjiagang regions was 171.9 billion kilowatt-hours and 32 billion kilowatt-hours, respectively. Shazhou Company's power generation accounted for 11% and 58% of the total electricity consumption in Suzhou and Zhangjiagang regions.

In terms of staffing, “the power plant is basically automated, and it can be seen that only one staff member is on duty in the monitoring room.” Shazhou Electric Power staff explained, “Currently, when the power plant load is adjusted, the power grid will automatically track and adjust. If the staff on duty observe the data, they can directly detect any alarm information.”

In terms of available resources, the factory area of Shazhou Electric Power Company is directly connected to the terminal, saving transportation costs. The company has 2 Yangtze River coal terminals, 0.05 million tons and 100,000 tons respectively, which have formed a coal cargo throughput capacity of 10 million tons/year. Last year, the coal terminal “#1泊位升等” to which it belongs received approval documents from the Provincial Maritime Administration to berth 0.05 million-ton ships. After upgrading, it is estimated that it will save more than 50 million yuan in costs every year.

During the investigation, many people in charge of Yongtai Energy's power sector repeatedly mentioned “trying our best to increase revenue.” Chairman of Shazhou Electric Power explained, “The company's terminals are currently mainly for personal use. The power plant plans to develop external terminal business to increase profit points.”

Huaxing Electric Power, another power plant of Yongtai Energy in Zhangjiagang, is also using existing assets to create new profit growth points. The company will use the power plant's 60-kilometer gas pipeline from Suzhou to Zhangjiagang outside the plant to develop a new natural gas sales business along the pipeline.

At the same fixed cost, the number of hours generated is the key to the plant's revenue. “The location advantage of power plants is very important. There is not much difference in the construction cost of the same power plant, but there is a big difference in the number of hours used,” a person from Shazhou Electric Power Company said. “The number of hours used by our power plants is close to 5,600 hours per year. This is very high throughout the country. The number of hours used for power generation is directly related to the efficiency of power plants.”

According to reports, Zhangjiagang, where Shazhou Electric Power and Huaxing Electric Power are located, is located in the economically developed Yangtze River Delta region. It has two major steel companies, Shagang and Yonggang, and is the center of electricity consumption in southern Jiangsu.

Great Wall Securities quoted financial data from the National Energy Administration and various companies as showing that in 2023, the number of coal power generation hours used by national power generation companies was 4,466 hours, while Guodian Electric Power, Datang Power, Huaneng International, and Huadian International used 5,210 hours, 4,388 hours, and 4301 hours, respectively.

Coal mines are “eaten dry and squeezed clean”

At the command and dispatch center of the Xingqing Coal Industry, you can observe the surveillance video of all aspects of the Xingqing coal mine in real time through screens one by one. The video shows that there aren't many underground workers. According to company sources, “After using intensive, intelligent, and mechanized equipment, the coal mine employs very few people. Currently, the company mainly achieves unattended and automated control in important places and key areas such as ventilation rooms, pump rooms, substations, overhead passenger devices, and belt transportation systems.”

Xingqing Coal is located in Lingshi County, Jinzhong City, Shanxi Province. It belongs to Lingshi Yinyuan Coal Coke Development Co., Ltd., a subsidiary of Yongtai Energy. It is one of Yongtai Energy's 10 mines in the Lingshi region. By the end of 2023, it had 0.102 billion tons of reserves, a design production capacity of 0.9 million tons/year, and a supporting Kengkou coal washing plant.

According to people from Xingqing Coal Company, mines with a production capacity of 0.9 million tons/year do not exceed 180 people per shift according to the country's current standards. The company operates three shifts in the morning, middle, and evening. The morning shift (8 a.m. to 16 p.m.) is for safety maintenance. The middle shift (16 a.m. to 24 p.m.) has about 130-140 people, including coal miners, excavators, and auxiliary workers (responsible for opening belts, ventilation, drainage, gas measurement, etc.). All operations are not allowed to be operated alone; one person is required to operate and monitor by one person.

Referring to the performance appraisal system, mine managers explained that safety comes first, followed by improving yield and efficiency. Among them, the yield aspect refers to the amount of coal produced by removing coal gangue. The mined coal is mixed with coal gangue (a type of dark gray rock with a lower carbon content and harder than coal). “When working on underground sites, try not to harvest gangue by adjusting the angle of the stand, etc., and the coal quality is relatively good. If you mix too many stones and don't make money, the company has penalties. Gangue cannot be 100% avoided. Just like eating bread, it has a layer of sauce in the middle; this layer of sauce must be eaten.”

In order to “eat dry and press clean” the mined coal, Xingqing Coal Industry supports the Kengkou Coal Washing Plant to process and add value to raw coal products locally. According to reports, the coal washing plant currently uses advanced domestic heavy coal preparation technology. All of the key equipment uses imported equipment, and all equipment is automatically controlled and monitored throughout the process, which has advantages such as high coal preparation efficiency and low cost.

Since the coal washing plant was built in 2015, it has continued to upgrade and upgrade, with a total investment of close to 100 million dollars. According to reports, starting last year, the coal content in waste has been reduced from 8% to 1% by collecting gold from garbage dumps. This is equivalent to washing 1 million tons of raw ore. Originally, 0.08 million tons of coal had to be thrown away, but now 0.07 million tons less are being thrown away.

The economic benefits brought about by upgrading the bid are also quite impressive.

According to company sources, the upgraded coal washing plant last year brought a net profit increase of about 0.1 billion yuan to the Xingqing coal mine. Without continuous upgrading of washing technology, the profit margin could reach 30 million-40 million yuan.

There is a contrast between performance and stock prices

In contrast to sluggish stock prices in the secondary market, Yongtai Energy's performance has continued to grow in recent years. Net profit for the full year of 2022 and 2023 was 1.909 billion yuan and 2,266 billion yuan respectively. The first half of this year is expected to achieve net profit of 1.16 billion yuan to 1.26 billion yuan, achieving year-on-year growth, and the performance is relatively steady.

Looking at leading performance, China Shenhua (601088.SH), which also specializes in coal and electricity, expects net profit to drop 8.1% to 14.1% year on year in the first half of the year; most other coal stocks are under pressure. The net profit for the first half of the year, such as Orchid Science and Technology (600123.SH), Shanxi Coking (600740.SH), and Jizhong Energy (000937.SZ), all fell by more than 50% year on year.

Looking at specific self-help measures, the Financial Services Association reporter observed that the major planning items in Yongtai Energy's self-help fight this time were matters relating to the purchase of controlling interests in assets such as energy storage companies and high-quality coal resources, and the method was to issue shares and pay cash.

Regarding the question of “whether additional issuance is a hedge against repurchases and cancellations,” Yongtai Energy Securities Department staff told the Financial Federation reporter that the current issuance of shares to purchase assets is also aimed at consolidating the existing main energy business and giving market confidence, and that the company will also control the appropriate issuance scale. It should also be explained that the company can introduce long-term strategic investors by issuing shares, which is also a long-term measure for the company to increase value.

Looking back at the past, Yongtai Energy experienced a debt crisis in 2018. As to whether the company would default twice, Yongtai Energy Securities Department staff said that at present, the company's balance ratio has dropped sharply to a low level of 52.17%, which is lower than the industry average; at the same time, operating cash flow is also quite abundant, 7.025 billion yuan in 2023 and 1.115 billion yuan in the first quarter of this year, and it is expected to maintain a good level of steady growth this year, so it is important to guarantee the company's debt service and production There are no problems with operations, etc.

From a business perspective, in addition to main businesses such as coal and electricity, Yongtai Energy is transforming the layout of electric energy storage. In May of this year, it spent 92 million yuan to acquire 49% of the shares of Beijing Detai Energy Storage Technology Co., Ltd. held by the affiliated company Hyde Co., Ltd., and held 100% of Detai Energy Storage's shares.

Yongtai Energy said in the performance forecast that the company's largest single phase of the 3,000 tons/year high-purity vanadium pentoxide metallurgical production line, the first phase of 300 MW/year, and a new generation of high-capacity, long-term all-vanadium liquid flow batteries and related products production line in the country began construction in June 2023, and is expected to be put into operation one after another in the fourth quarter of 2024.