Key points of investment
Introduction: The month-on-month decline in coal volume and price dragged down the month-on-month decline in Q2 profits. Did Malang's nuclear increase pass smoothly? Incident: On August 30, 2024, the company announced that 2024H1 achieved net profit of 1.455 billion yuan to mother, a year-on-year decrease of 64.70%; 2024Q2 net profit to mother was 0.648 billion yuan, a year-on-year decrease of 41.89%, a year-on-year decrease of 19.80%, and the Malang coal mine was approved.
Coal: Production and sales prices fell month-on-month, and profits in the coal sector declined. In terms of production and sales volume, production and sales declined due to geological changes in Baishi Lake and the impact of safety inspections. 2024Q2 achieved raw coal production of 3.875 million tons, a decrease of 34.23%; raw coal sales were 5.578 million tons, a decrease of 28.51% month on month; improved coal production was 0.8851 million tons, up 3.29% month on month; and improved coal sales were 1.1138 million tons, a decrease of 8.35% year on year. In terms of price, due to the better hydropower generation of incoming water this year, the price drop was driven by the decline in coal power generation. The average price of 2024Q2 Qinhuangdao 5,500K thermal coal liquidation at the end of the day was 848 yuan/ton, a decrease of 5.91% over the previous month.
Natural gas: Production and sales declined month-on-month, and prices increased month-on-month. In terms of production and sales, 2024Q2 achieved 0.178 billion square meters of natural gas production, a decrease of 5.02% over the previous month; sales volume was 0.997 billion square meters, a decrease of 15.61% over the previous month. In terms of price, the CIF price of Korean LNG was 11.25 US dollars/million British thermal pounds in 24Q2, an increase of 20.97% over the previous month.
Coal chemicals: Price recovery drives profit growth. In terms of production and sales, 24Q2 methanol, coal-based oil products, coal chemical by-products, carbon dioxide achieved production of 29.03/0.1486/0.1078/0.0243 million tons, a month-on-month change of +0.80%/+2.55% +0.19%/-13.83%; achieved sales volume of 27.83/0.1614/0.1455/0.0238 million tons, a year-on-year change of -2.11%/+12.32%/-13.77%. In terms of price, the average price of 24Q2 methanol/coal tar/carbon dioxide was 2178/4292/321 yuan/ton, an increase of 10.01%/5.34%/1.57% over the previous month.
Key project construction: Malang's nuclear increase successfully passed, and I am optimistic about the company's coal production and sales growth in the second half of the year. The company received approval from the National Development and Reform Commission for the Malang No. 1 coal mine project. The approved construction scale is 10 million tons/year. Production and sales declined in Baishi Lake in the second quarter due to extreme windy weather. Production and sales have now resumed normal production. They are optimistic about the smooth release of the company's coal production capacity in the second half of the year, which will drive the company's performance growth.
Investment advice: Net profit due to mother for 2024-2026 is expected to be 6.069/7.081/8.232 billion yuan, and the current stock price corresponds to PE 6.45/5.53/4.75 times, maintaining a “buy” rating.
Risk warning: Consumption recovery falls short of expectations, supply and demand improvements fall short of expectations, and LNG prices fall short of expectations.