Affected by falling coal prices, the company's performance was adjusted

2024H1's revenue was 72.312 billion yuan, -24.07% YoY; net profit to mother was 7.568 billion yuan, -31.64% YoY; net profit after deducting non-return to mother was 7.298 billion yuan, -27.37% YoY; net operating cash flow was 12.62 billion yuan, +85.42% YoY.

Production restrictions were lifted, production recovered, and the cost of coal per ton fell. 2024H1 commercial coal production was 69.078 million tons, +8.2% over the same period. Among them, the sharp increase in production by Tianchi Energy and Inner Mongolia Mining was mainly due to the partial elimination of production limiting factors under 2024H1 geological conditions.

Commercial coal sales volume was 67.875 million tons, +2.93% YoY.

The average price of 2024H1's tons of coal was 697.62 yuan/ton, -23.6% year-on-year. The cost of 2024Q2 tons of coal was 372.1 yuan/ton, -17.4% year-on-year and -5.6% month-on-month.

Coal chemical's gross profit per ton has expanded

2024H1 chemical product production was 4.181 million tons, +0.87% year over year, chemical product sales volume was 3.747 million tons, -1.02% year over year, of which methanol production was 1.993 million tons, +3.48% year over year, and methanol sales volume was 1.908 million tons, +0.001% year over year.

The sales price of a single ton of methanol was 1836.48 yuan/ton, +40.41% year over year, the cost per ton was 1551.89 yuan/ton, -16.16% year over year, and gross profit per ton was 284.59 yuan/ton. Compared with last year, it turned a loss into a profit. We think it was mainly due to rising methanol prices and coal price adjustments.

Profit forecast and valuation: We originally predicted that the company's net profit for 2024-2025 would be 20.5/22.4 billion yuan. Now, due to the coal boom falling short of expectations, we adjusted the company's 2024-2025 net profit to 16.52/16.95 billion yuan, and added a 2026 net profit forecast of 17.65 billion yuan, corresponding to EPS of 1.65/1.69/1.76 yuan, respectively, to maintain the “buy” rating.

Risk warning: coal supply exceeded expectations; coal imports grew more than expected; coal mine safety supervision fell short of expectations; demand for electricity and chemicals fell short of expectations; macroeconomic demand fell short of expectations.