Q2 Performance increased month-on-month

2024H1's operating income was 84.737 billion yuan, -6.54% year over year; net profit to mother was 10.556 billion yuan, -8.83% year over year; net profit after deducting non-return to mother was 11.182 billion yuan, -17.97% year over year; net operating cash flow was 19.967 billion yuan, +21.47% year over year.

Production and sales increased year-on-year, and the full cost of a ton of coal declined

2024H1 commercial coal production was 86.4067 million tons, +2.78% year over year; commercial coal sales volume was 131.5499 million tons, +2.29% year over year, of which self-produced coal sales were 83.3859 million tons, +0.71% year over year, and trade coal sales volume was 48.1641 million tons, +5.16% year over year.

The price of 2024H1 coal was 574.96 yuan/ton, -73.46 yuan/ton, a decrease of 11.33%; the full cost per ton of raw coal was 281.39 yuan/ton, -16.38 yuan/ton, a decrease of 5.5%. Among them, material costs and related taxes were reduced. 2024H1's profit per ton of self-produced coal was 293.57 yuan/ton, -16.28% year-on-year.

The month-on-month increase in Q2 performance depended on increased sales volume and changes in fair value. Q2 net profit for the single quarter was 5.904 billion yuan, +26.91% month-on-month. We believe that the month-on-month increase in net profit was mainly due to Q2's self-produced coal sales +1.5659 million tons month-on-month and net revenue from fair value changes of +1.194 billion yuan month-on-month.

Profit forecast and valuation: We maintain 2024-2026 net profit of 22.059/22.646/23.087 billion yuan, corresponding EPS of 2.28/2.34/2.38 yuan, respectively, and maintain a “buy” rating risk warning: risk of large fluctuations in coal prices; risk of economic downturn; risk of coal supply growth exceeding expectations; risk of coal imports exceeding expectations; risk of electricity and coal demand falling short of expectations; risk of changes in fair value exceeding expectations.