On August 30, 2024, the company announced its 2024 semi-annual results. 24H1 achieved operating income of 72.312 billion yuan, -24.07% year-on-year; net profit to mother of 7.568 billion yuan, or -31.64% year-on-year, with basic earnings of 1.02 yuan per share. In the 24Q2 quarter, the company achieved operating income of 32.678 billion yuan, -27.72% YoY, -17.55%, and net profit to mother 3.812 billion yuan, -17.34% YoY, +1.46%.

Coal business: Production and sales stabilized & costs declined, and second-quarter results improved month-on-month. The 24H1 coal sector achieved a total revenue of 47.351 billion yuan, -21.3%; cost 27.555 billion yuan, -11.8%; gross profit 19.796 billion yuan, -31.5% year over year; and gross margin of 41.8%, -6.25 pct year on year. In the second quarter, the coal sector achieved a total revenue of 22.497 billion yuan, -9.5% month-on-month; cost 12.328 billion yuan, -19.0% month-on-month; gross profit of 10.169 billion yuan, +5.6% month-on-month; and gross margin of 45.2%, or +6.5 pct month-on-month.

(1) In terms of production and marketing: 24Q2, the company achieved coal production of 34.44 million tons, -0.6% month-on-month; achieved commercial coal sales of 33.69 million tons, or -1.4% month-on-month, of which 32.63 million tons of self-produced coal were sold, +4.8% month-on-month.

(2) In terms of price cost: 24Q2 the company's comprehensive coal sales price was 668 yuan/ton, -8.2% month-on-month, of which self-produced coal sold for 660 yuan/ton, -2.3% month-on-month. The comprehensive cost of a ton of coal was 366 yuan/ton, -17.9% month-on-month; of these, the cost of self-produced tons of coal was 351 yuan/ton, -4.6% month-on-month.

Chemical business: The product structure is continuously optimized, and 24H1's performance is increasing steadily. The 24H1 chemical sector achieved gross profit of 2.365 billion yuan, +17.84% year-on-year.

(1) In terms of production and sales: 24H1 chemicals achieved a total production and sales of 4.181 million tons/3.747 million tons, +0.84%/-1.00% year-on-year.

(2) In terms of price cost: In 24 years, H1 Company sold 3,339 yuan/ton for a ton of chemical products, -0.4%; ton cost 2,708 yuan/ton, -4.1% year-on-year; gross profit per ton was 631 yuan/ton, +19.0% year-on-year.

Accelerate the release of high-quality resources, and can be expected to increase production capacity in the future. The company plans to build Wanfu Coal Mine and Wucaiwan No. 4 Open Pit Mine in 2024-2025. In 2024-2030, the Huolin River No. 1 Coal Mine, Caosiyao Molybdenum Mine, Liu Sanyudan Coal Mine, and the Galutu Coal Mine will start construction one after another. It is expected to add more than 40 million tons of coal production capacity, and future production capacity growth can be expected.

Investment advice: We expect the company to achieve net profit of 15.1/17.3/19 billion yuan in 24-26, corresponding PE of 9.7X, 8.5X, and 7.7X, maintaining a “buy” rating.

Risk warning: Downstream demand falls short of expectations; natural gas prices fall short of expectations; safety inspection intensity exceeds expectations.