24H1's net profit to mother was -17.3% YoY, of which 24Q2 was +2.9% YoY. 24H1 achieved net revenue/return to mother of 92.98/9.79 billion yuan, -15%/-17.3% YoY. In the Q2 quarter, the company's net profit to mother was 4.82 billion yuan, +2.9% year over year and -3% month over month.

24Q2 coal production increased month-on-month, 24H1 sales price/cost -6%/+3% year-on-year. 1) Production and sales volume: 24H1's commercial coal production/self-produced coal sales volume was 66.5/66.19 million tons, -0.9%/+2.1% year-on-year, of which sales volume of thermal coal/coking coal from self-produced coal was 60.55/5.64 million tons, +2.4%/-1.4% year-on-year. In the Q2 single quarter, self-produced coal sales were 33.88 million tons, +5%/+4.9% year over year, of which thermal coal/coking coal sales were 30.94/2.94 million tons, +5.5%/-0.7% year over year, and +4.5%/+8.9% month over month. 24H1 Company's high quality production capacity mines such as the Haize Coal Mine and the East Open Pit Coal Mine actively exploited the advantages of increasing nuclear production capacity. Other mines scientifically arranged maintenance and strengthened production continuity, and achieved basic stability in an environment with strict production safety. 2) Price: The comprehensive price of 24H1's self-produced coal was 584 yuan/ton, -6.4% year-on-year, of which thermal coal/coking coal sold for 511/1,371 yuan/ton, -6.8%/-2.9% year-on-year. In Q2, the combined price of self-produced coal was 571 yuan/ton, -1.1%/-4.6% yoy, of which thermal coal/coking coal sold for 508/1239 yuan/ton, -2.2%/+8.1% YoY, and -1.1%/-18.2% month-on-month. 3) Cost: The unit cost of 24H1's own coal production was 293 yuan/ton, +2.7% compared with the same period last year.

Among them, the unit cost of Q2 self-produced coal was 295 yuan/ton, -1.1%/+1.3% year-on-year. 4) Gross profit: 24H1 achieved a gross profit margin of 49.8% from its own coal production, of which Q2 gross profit margin was 48.4%, and -2.9% month-on-month; 24H1 tons of coal gross profit was 291 yuan, of which 307/276 yuan was Q1/Q2 tons of coal.

24H1 coal chemical costs dropped significantly, and the net profit of the segment was +24% year-on-year. 1) Production and sales volume: 24H1 sold 0.76/1.183/0.859 million tons of polyolefin/urea/methanol, +1.5%/-1.3%/-11.5% year-on-year. In Q2, the company sold 0.387/0.632/0.463 million tons of polyolefin/ urea/ methanol, +3.8%/+14.7%/+16.9% month-on-month. Affected by factors such as planned overhauls of methanol plants, 24H1 produced 2.927 million tons of major coal chemical products, a year-on-year decrease of 2.5%. 2) Price: Average sales price of polyolefin/urea/methanol was 6955/2167/1773 yuan/ton, +0.8%/-12.8%/+0.2%; Q2 average sales price of polyolefin/urea/methanol was 7058/2106/1857 yuan/ton, +3.1%/-5.9%/+10.9% month-on-month. 3) Cost: 24H1 polyolefin/ urea/ methanol unit sales cost 5866/1470/1705 yuan/ton, -3.1%/-12.9%/-13.6% YoY; of which Q2 unit sales cost 5834/1391/1674 yuan/ton, -1.1%/-10.9%/-3.8% month-on-month. 4) Profit: The coal chemical division of 24H1 achieved a net profit of 1.77 billion yuan, +24.4% year-on-year. We believe that the cost pressure on the company's coal chemical business has been reduced, the compounded company's scale effect and integrated synergy advantages are outstanding, cost control is effective, and profits are expected to be stable, moderate and positive.

Continue to give back to investors, and the 24H1 mid-term dividend ratio is 30%. The company distributes cash dividends to shareholders of 2.94 billion yuan based on 30% of the 2024H1 net profit, which is equivalent to 0.221 yuan (tax included) per share based on the company's total issued share capital of 13.258 billion shares. We believe that in the future, the company will continue to respond to policy calls to increase the dividend ratio and increase the investment value of listed companies.

Profit forecasting and valuation. We believe that the company's main coal business is expected to increase steadily in price, the coal chemical business is expected to improve steadily, and the coal industry chain extension chain is progressing steadily against world-class energy companies. We expect the company's net profit to be 19/21.1/21.8 billion yuan for 24-26, and the corresponding EPS is 1.43/1.59/1.65 yuan. Referring to comparable companies, we will give 11 to 13 times PE in 2024, corresponding to a reasonable value range of 15.78 to 18.65 yuan, maintaining the “superior to the market” rating.

Risk warning. Downstream demand has declined sharply, and mines under construction have not been successfully put into operation.