Incident Overview

The company released a report for the third quarter of 2024. In the first three quarters of 2024, the company achieved a total operating income of 106.633 billion yuan, a year-on-year decrease of 21.50%, and realized a net profit of 11.405 billion yuan, a year-on-year decrease of 26.98%, net profit not attributable to mother, a year-on-year decrease of 22.45%; of these, 24Q3 achieved operating income of 34.321 billion yuan, year-on-year, and +5.03% month-on-month net profit 3.837 billion yuan, -15.63% YoY, +0.66% month-on-month. The company's profit declined year-on-year during the reporting period, mainly due to falling prices of major products such as coal.

Coal business: coal production and sales are growing steadily

In terms of production and sales volume: In the 1st to 3rd quarter of 2024, the company's coal production was 105.81 million tons, up 8.8% year on year, and sales volume was 102.59 million tons, up 3.5% year on year. Among them, sales of self-produced coal were 96.22 million tons, up 9.0% year on year. The overseas holding subsidiary Yancoal Australia's coal production was 27.18 million tons, up 14.7% year on year, and sales volume was 27.25 million tons, up 18.5% year on year.

In terms of sales price: The average sales price of coal in the 1st to 3rd quarter of 2024 was 683 yuan/ton, down 18.7% year on year, and the average sales price of self-produced coal was 663 yuan/ton, down 16.5% year on year. Yancoal's average sales price of Australian coal was 838 yuan/ton, a year-on-year decrease of 23.1%.

Cost aspect: In the 1st to 3rd quarter of 2024, the sales cost of the company's coal business was 38.898 billion yuan, a year-on-year decrease of 5.208 billion yuan; the comprehensive sales cost for tons of coal was 379 yuan/ton, up 11.6% year on year, and the sales cost for tons of traded coal was 934 yuan/ton, down 23.6% year on year.

Coal chemical business: Production and sales declined year-on-year, and profits continued to improve in the 1st to 3rd quarter of 2024. The company's coal chemical business operation was stable. The output of various products was 6.355 million tons, down 2.2% year on year, and sales volume of various products was 5.697 million tons, down 3.4% year on year; sales cost per ton in the first three quarters was 2,606 yuan/ton, down 3.2% year on year. Among them, the sales cost for the Q3 single quarter was 2,408 yuan/ton, down 1.8% year on year. The gross margins of the coal chemical business for the first three quarters of 2024 and Q3 were 20.7% and 24.2% respectively, and the overall profit level of the sector showed an improvement trend.

Expansion and development in multiple fields, future growth can be expected

The company released the “Development Strategy Outline” in 2021, establishing a development plan “focusing on the five major industries of mining, high-end chemical materials, new energy, high-end equipment manufacturing, and smart logistics”, and collaborative development in multiple fields. In October 2024, the company announced that it will invest 9.574 billion yuan to build a 0.8 million ton olefin project to increase its coal chemical business; increase foreign investment and acquire three companies, Schalf, Wubo Technology, and Highland Resources in 2024, to expand and develop in the fields of high-end equipment manufacturing, smart logistics, and mining. The company is based on the main coal mining business, has developed comprehensively in many fields, and future growth can be expected.

Investment advice

We estimate that the company's net profit attributable to the parent company in 2024-2026 will be 14.824, 18.689, 21.004 billion yuan, and EPS will be 1.48, 1.86, and 2.09 yuan/share, and the corresponding PE will be 10.56, 8.38, and 7.45 times. The company formulates future development plans and develops collaboratively in multiple fields. The company has broad room for future growth, stable and high dividends to enhance investment value. Maintain a “buy” rating.

Risk warning

Coal prices fell sharply; downstream demand fell short of expectations; risk of safety accidents in coal mines; prices of coal chemical products fluctuated sharply