Event: The company released its results report for the third quarter of 2024. In the first three quarters of 2024, the company achieved operating income of 125.427 billion yuan, -1.57%; net profit to mother of 15.943 billion yuan, -1.46% year over year; net profit after deduction of 16.349 billion yuan, -13.94% year on year; on a quarterly basis, the company achieved operating income of 40.69 billion yuan in the third quarter, +10.7% year on month, and -8.1% month on month; net profit to mother 5.387 billion yuan, +17.1% year on month 8.8%; net profit without return to mother was 5.166 billion yuan, -3.7% year-on-year and -11.4% month-on-month.

Coal business: Production and sales declined month-on-month in 24Q3, and costs improved in the first three quarters. 1) Production and sales volume: In the first three quarters of 2024, the company's raw coal production was 127.7739 million tons, +2.8%; commercial coal sales were 195.9498 million tons, +5.1% year over year, of which self-produced coal sales were 125.9844 million tons, +2.4% year on year; trade coal sales were 69.9654 million tons, +10.4% year over year. On a quarterly basis, Q3 produced 41.3672 million tons of raw coal, +2.9%, or -8%; sold 64.3999 million tons, +11.3% year over month, -8.1% month on month, of which self-produced coal sales volume was 42.5985 million tons, +5.8% year on month, +0.3% month on month; trade coal sales volume was 21.8014 million tons, +23.9% year over month. 2) Price & cost: In the first three quarters of 2024, the comprehensive sales price of the company's commercial coal was 618.32 yuan/ton, -6.24%; the comprehensive cost was 403.65 yuan/ton, -2.51% year-on-year. On a quarterly basis, Q3 Company's comprehensive sales price was 706.9 yuan/ton, +3.33% year-on-year.

The increase in shareholding shows confidence, and the future of the coal and electricity layout can be expected. On October 28, the company issued an announcement on the completion of the increase in holdings. Through centralized bidding, Shaanxi Coal Group increased its shareholders' confidence in future development by 12.13 million shares, accounting for 0.125% of the company's total issued share capital. The cumulative increase in holdings was 0.27 billion yuan (excluding taxes and fees). In terms of development layout, the company signed an “Asset Transfer Intent Agreement” with Shaanxi Coal Group on September 5. Shaanxi Coal Group plans to transfer all of its shares in Shaanxi Coal Electric Power Group to Shaanxi Coal. Shaanxi Coal Electric Power Group currently holds 10.82 million kilowatts of installed capacity (9.62 million kilowatts of thermal power). After the acquisition is completed, related transactions can be further reduced and operating income increased. The company actively extends the main coal industry chain and can be expected to build integrated coal and electricity growth.

Profit forecast: According to the 2024 third quarter report, we expect the company's revenue for 2024-2026 to be 172.3/174.4/178.5 billion yuan, net profit to mother to reach 21.4/22.2/23.2 billion yuan respectively, and PE 11.22/10.78/10.33 times, respectively, maintaining the company's “buy” rating.

Risk warning: macroeconomic growth falls short of expectations; coal prices fall short of expectations; new project commissioning progress falls short of expectations