Event: The company released its 2024 semi-annual report. In 24H1, the company achieved operating income of 14.057 billion yuan, or -32.01%; net profit to mother of 1.291 billion yuan, or -58.11% year-on-year; net profit of 1.38 billion yuan after deducting non-return to mother, or -55.68% year-on-year. On a quarterly basis, Q2 achieved operating income of 7.701 billion yuan, -23.2% YoY, +21.17%; net profit to mother 0.707 billion yuan, or -48.55% YoY, +21.3% month-on-month; net profit without return to mother 0.777 billion yuan, -44.04% YoY and +28.84% month-on-month. Q2 The company's non-operating expenses were 0.17 billion yuan, an increase of 0.132 billion yuan over the previous year, mainly due to an increase in anticipated liabilities due to prior litigation.

Price & cost: In 24Q2, the price of self-produced coal increased month-on-month, and the cost decreased month-on-month. 1) In terms of price, 2024H1, the total price of the company's coal was 660 yuan/ton, -12.63%; of these, self-produced coal sold at 686 yuan/ton, -6.11% year-on-year; and the price of trade coal was 626 yuan/ton, -23.69% year-on-year. On a quarterly basis, Q2's revenue per ton of coal was 655 yuan/ton, -3.28%, and -1.86% month-on-month, of which self-produced coal sold for 706 yuan/ton, +6.65% year-on-month, and +6.58% month-on-month; traded coal sold for 590 yuan/ton, -16.59% YoY and -12.51% month-on-month. 2) In terms of cost, 2024H1, the company's comprehensive coal cost was 436 yuan/ton, +3.71% year over year; of these, self-produced coal cost was 308 yuan/ton, +10.65% year over year, and trade coal cost was 610 yuan/ton, -21.8% year on year. On a quarterly basis, Q2 Company's cost per ton of coal was 425 yuan/ton, +6.67%, and -5.08%, of which the cost of self-produced coal tons was 306 yuan/ton, +18.32%, and -1.78% month-on-month; the cost of trading tons of coal was 578 yuan/ton, -14.82% year-on-year and -11.45% month-on-month.

Production and sales: Production and sales recovered significantly from month to month in Q2. 2024H1, the company achieved coal production/sales volume of 15.38/20.83 million tons, -27.4%/-22.71% YoY; of these, self-produced/traded coal sales volume was 11.92/8.91 million tons, or -38.51%/+17.77% YoY. On a quarterly basis, 24Q2's production/sales volume was 7.87/11.54 million tons, -25.5%/-20.67%, and +4.68%/+24.12% month-on-month, of which self-produced coal sales were 6.46 million tons, -33.27%, and +18.21% month-on-month; trade coal sales volume was 5.08 million tons, +4.38% year-on-month, and +32.53% month-on-month. During the reporting period, the company expedited the processing of production capacity increase procedures and completed the production factor announcements for Changchun Xing Coal Industry (6 million tons/year), Lingzhida Coal Industry 2.4 million tons/year, and Hanjiawa Coal Industry (1.5 million tons/year). It is planned that raw coal production will not be less than 33 million tons for the whole year, and production is expected to continue to rise in the second half of the year.

The dividend promise was announced, and the investment value was highlighted. The company issued the “2024-2026 Shareholder Return Plan” in 2023, further clarifying the 2024-2026 dividends. During the planning period, the company will distribute profits in cash every year of no less than 60% of the distributable profit achieved in that year. According to 24H1 annualized profit, the corresponding dividend rate (8/30 closing price) is 6.8%. The high dividend highlights the allocation value.

Profit forecast: According to the company's mid-term performance report for 2024-2026, we expect the company's total revenue for 2024-2026 to be 33.1/33.5/34.3 billion yuan, net profit attributable to mother of 2.9/3.1/3.3 billion yuan, and PE 7.90/7.04 times, respectively, maintaining a “buy” rating.

Risk warning: Project progress falls short of expectations; coal prices fall short of expectations; macroeconomic recovery falls short of expectations.