[Incident:

The company released the “2024 Semi-Annual Report” after closing on August 9, 2024.

Comment:

Business performance has grown steadily, and the mining business continues to be developed

In the first half of 2024, the company achieved operating income of 0.232 billion yuan, an increase of 15.15% year on year; realized net profit of 32.2068 million yuan, an increase of 13.62% year on year; realized net profit deducted from non-mother of 30.7742 million yuan, an increase of 13.24% year on year. Reasons for the increase in performance: Benefiting from the promotion of mining industry policies and the continuation of the overall economic benefits of coal companies and the demand for safety, intelligence and automation, the company combined established development strategies to actively explore the main business market. The mining business achieved revenue of 0.225 billion yuan, an increase of 15.56% over the previous year.

National policies continue to gain strength to clarify the development direction of intelligent mines

On April 24, 2024, 7 departments including the State Mine Safety Supervision Administration jointly issued the “Guiding Opinions on Further Promoting Intelligent Mine Construction and Promoting Mine Safety Development”, which proposes to establish a complete intelligent mine standard system by 2026, promote the integration and interconnection of mine data to achieve intelligent environmental sensing, intelligent system linkage, and intelligent warning of major disaster risks. Intelligent coal mines account for no less than 60% of the country's intelligent production capacity. The number of intelligent work surfaces accounts for no less than 30%, and the normalized operation rate of intelligent work surfaces is not less than 80%, coal mines and non-hazardous coal mines Heavy jobs The replacement rate of intelligent operating equipment or robots is not less than 30% and 20%, respectively. The number of underground mine personnel nationwide has been reduced by more than 10%, and a batch of intelligent mines with no more than 50 workers per shift has been built. By 2030, establish a complete intelligent mine technology, equipment and management system, achieve deep integration and sharing of mine data, promote less manned and unmanned mine mining operations, effectively prevent and control major safety risks, and greatly improve the level of intrinsic mine safety.

A plan to issue shares to specific targets was announced. The increase in the actual controller's holdings showed confidence in future development. In July 2024, the company released the “2024 Stock Issuance Plan”, which plans to issue shares to the controlling shareholder and actual controller Mr. Ma Yan. The controlling shareholder's holding ratio of the company will increase from 15.42% to 21.43% (not considering other influencing factors, based on the upper limit of the number issued), which helps to further enhance the stability of the company's control rights. At the same time, it is beneficial to send a positive signal to the market and small and medium shareholders. The total amount of capital raised in this offering does not exceed 180 million yuan (including the number of shares), and the net amount of capital raised after deducting the issuance fee will be used to supplement working capital.

Profit forecasting and investment advice

With solid mining products and sales and service capabilities, the company has formed a first-mover advantage in the new smart mining circuit, and there is plenty of room for continuous growth in the future. The company's revenue for 2024-2026 is estimated to be 0.537, 0.653, 0.783 billion yuan, net profit to mother 0.066, 0.088, 0.113 billion yuan, EPS 0.22, 0.29, 0.37 yuan/share, and the corresponding PE is 47.71, 35.65, 27.77 times. Maintaining a “buy” rating considering the company's growth and the future prosperity of the industry.

Risk warning

The risk of market development in new application areas; the risk of technological innovation failure; the risk of bad accounts receivable.