The company released its 2024 semi-annual report: 2024H1 achieved revenue of 84.74 billion yuan (-6.5%), net profit to mother of 10.56 billion yuan (-8.8%), net profit of 11.18 billion yuan (-18.0%); of these, in 2024Q2, the company achieved revenue of 44.29 billion yuan (-3.4%), net profit attributable to mother of 5.9 billion yuan (+26.5%), net profit not attributable to mother of 5.83 billion yuan (- 8.4%).

The increase in self-produced coal production/sales and the decline in the cost of a ton of coal offset the downward impact of some coal prices, and the main business remained steady.

2024H1 company produced 86.407 million tons of coal, +2.8% year on year; coal sales volume was 131.55 million tons, +2.3% year on year, of which self-produced coal sales volume was 83.386 million tons, +0.7% year on year; self-produced coal sold at 538.2 yuan/ton, the year-on-year price was -56.6 yuan/ton; the company continued to promote “big cost” control. The full cost of the original coal preparation unit in the first half of the year was 281.4 yuan/ton, -16.4 yuan/ton, of which the foreign commission's operating expenses were reduced by 3.1 yuan/ton Reduced by 3.0 yuan/ton, and related taxes reduced by 5.9 yuan/ton. 2024Q2's coal production was 44.952 million tons, +4.0% year on year; self-produced coal sales were 42.476 million tons, +0.3% year over year.

Distribute mid-term dividends to actively reward investors. The company announced that it plans to distribute a cash dividend of 0.109 yuan/share in mid-2024, with a dividend rate of 10% to positively return investors.

The accounting method for Salt Lake shares held by the company was transferred to long-term equity investment, and the size of financial assets measured at fair value was reduced. 2024H1's investment income was 0.93 billion yuan (year-on-year -0.28 billion yuan), and profit and loss from changes in fair value was 0.641 billion yuan (year-on-year +2.02 billion yuan), affecting total profit of +0.29 billion yuan. As of the first half of the year, the total financial assets of the company measured at fair value were 12.48 billion yuan, a decrease of 6.03 billion yuan from the beginning of the year. The decrease in stock asset value of 5.15 billion yuan was mainly due to the shift in the accounting method for Salt Lake shares held from transactional financial assets to long-term equity investment and the sale of some Longji shares. The decrease in private equity fund value of 0.96 billion yuan was mainly due to market fluctuations. As of the first half of 2024, the company held 4.9% of Salt Lake's shares.

Investment advice: Lower profit forecasts and maintain the “better than the market” rating.

Since the company's coal sales price was lower than previously expected, the profit forecast was lowered. The company's net profit to mother for 2024-2026 is estimated to be 21.9/22/22.3 billion yuan (previous value was 23.3/23.6/24 billion yuan) and PE 11.1/11.0/10.9, respectively. Considering that the company's coal mining conditions are good, the coal quality is excellent, the scale of coal production capacity is advantageous, and there is still room for growth. At the same time, the company's performance is steady, dividend returns are abundant, and it maintains a “superior to the market” rating.

Risk warning: The economic slowdown has led to a decline in demand for coal, the rapid development of new energy sources to replace demand for coal and electricity, the impact of production safety accidents, and the release of the company's nuclear production capacity increase falls short of expectations.