Incident: The company released its 2024 semi-annual report on August 31. 24H1 achieved revenue of 168.078 billion yuan, a year-on-year decrease of 0.81%; net profit to mother of 29.504 billion yuan, a year-on-year decrease of 11.34%; and basic earnings per share of 1.485 yuan. 24Q2 achieved revenue of 80.431 billion yuan, down 8.23% month-on-month and 2.39% year-on-year; net profit to mother was 13.62 billion yuan, down 14.25% month-on-month and 7.14% year-on-year. The results are generally in line with market expectations.

The sales volume of self-produced coal increased, but the selling price fell, and the gross margin of the coal business declined. In 24H1, the company produced 163.2 million tons of commercial coal, up 1.6% year on year; sales volume was 229.7 million tons, up 5.4% year on year. In terms of coal production, sales volume was 162.8 million tons, up 2.2% year on year; price was 533 yuan/ton, down 4.8% year on year; cost 309 yuan/ton, up 3.3% year on year; gross profit was 224 yuan/ton, gross profit margin was 42.1%, down 4.6 pct year on year. Taking the data before the merger and offset, the 24H1 coal division achieved revenue of 134.328 billion yuan, a year-on-year decrease of 0.7%; total profit of 26.039 billion yuan. As the average sales price of coal fell and operating costs rose, the gross profit margin of coal was 28.3%, a decrease of 3.5 pct year-on-year. In the 24Q2 quarter, commercial coal production was 81.9 million tons, up 1.61% year on year. In terms of self-produced coal, sales volume was 82.5 million tons, up 3.25% year on year; price was 532 yuan/ton, down 2.83% year on year; cost 320 yuan/ton, up 3.86% year on year; gross profit margin was 39.8%, down 3.88 pct year on year.

Electricity generation and sales increased year-on-year, but the number of hours used declined, and segment profits declined year-on-year. In 24H1, the company's power generation capacity was 104.04 billion kilowatt-hours, up 3.8% year on year, electricity sales volume was 97.89 billion kilowatt-hours, up 3.9% year on year, power generation business revenue was 44.354 billion yuan, up 0.4% year on year, cost 37.272 billion yuan, up 1.4% year on year, and total profit was 5.251 billion yuan, down 9.5% year on year. The selling price of electricity was 0.404 yuan/kilowatt-hour, a year-on-year decrease of 3.3%. By the end of June '24, the company had a total installed capacity of 44.822 million kilowatts, adding 188 megawatts of installed capacity during the reporting period; the average usage hours of 24H1 were 2,323 hours, a decrease of 6.5% over the previous year. Among them, the capacity of the coal-fired engine assembly machine was 43.244 million kilowatts; the average utilization time was 2354 hours, a decrease of 6.2% over the previous year. In the 24Q2 single quarter, power generation capacity was 48.69 billion kilowatt-hours, up 0.41% year on year, and electricity sales volume was 45.73 billion kilowatt-hours, up 0.48% year on year. The average usage hours were 1,087 hours, down 9.49% year over year.

Management expenses increased, and expenses increased year-on-year during the period. The 24H1 corporate period cost 5.962 billion yuan, an increase of 11.4% year-on-year.

Among them, sales expenses were 0.217 billion yuan, up 6.9% year on year; management expenses were 4.73 billion yuan, up 3.28% year on year; financial expenses were 36 million yuan, up 124% year on year, mainly due to foreign currency exchange rate fluctuations; and R&D expenses were 0.979 billion yuan, up 36.16% year on year, mainly affected by R&D investment and progress.

The transportation segment is expected to become a new profit growth point in the future. The Shuohuang Railway's 0.03 million-ton heavy-duty train was successfully put into operation. The Dongyue Railway was included in the list of major national construction projects, and the Huanghua Port Phase V project (adding about 50 million tons/year of coal sewage capacity) was approved and approved. The company's integrated operating advantages will continue to be consolidated and enhanced.

Investment analysis opinion: As of the end of June '24, the company actually held a total of 195.909 billion yuan in monetary capital and financial assets, and there was plenty of cash. The company's annual coal production accounts for a high share of long-term cooperation, and the performance is relatively steady. We maintain the company's 24-26 performance forecast. EPS is 3.07, 3.09, and 3.20 yuan, respectively, corresponding to the company's PE valuation of 12 times, 12 times, and 11.5 times. Due to the company's steady performance and prominent high dividend attributes, we maintain the company's “buy” rating.

Risk warning. The macroeconomic downturn led to a decline in downstream demand, and product prices fell beyond expectations; power plant construction fell far short of expectations.