Backed by the Shaanxi Coal Group, Shaanxi Coal is the only large-scale listed coal company in Shaanxi Province. As of the 2024 three-quarter report, the controlling shareholder of the company held 65.15% of the shares, and the actual controller is the Shaanxi Provincial State-owned Assets Administration Commission. The company is mainly engaged in coal mining, washing, transportation, sales and production services. Coal products are mainly used in the electricity, chemical and metallurgical industries.

The company's operating capacity is steady, and coal prices continued to decline in 2024, but the company's performance was relatively stable. In the first three quarters of 2024, the company achieved revenue of 125.43 billion yuan, down 1.6% year on year; net profit to mother was 15.94 billion yuan, down 1.5% year on year. The company's performance continued to improve in the third quarter of 2024, achieving revenue of 40.69 billion yuan in a single quarter, up 10.66% year on year; achieving net profit of 5.387 billion yuan per quarter, up 17.10% year on year.

Companies with high quality coal resources have abundant coal resource reserves, excellent quality, good storage conditions, and few natural disasters. As of the end of the 2023 annual report reporting period, the company had coal reserves of 18.141 billion tons and mining reserves of 10.441 billion tons. The mining period was more than 70 years. The company's coal resource reserves were among the highest among listed coal companies in China.

The production capacity advantage is obvious as a large coal enterprise in Shaanxi Province. The company has fully benefited from the concentrated production capacity process. In recent years, it has fully absorbed the benefits of resource concentration in Shaanxi Province and further expanded the company's production scale. The company's own coal production has risen steadily, from 0.115 billion tons in 2019 to 0.162 billion tons in 2023, with a compound annual growth rate of 8%, which is at the leading level in the industry.

Focusing on costs, the cost of tons of coal continued to drop in the first half of 2024, the full cost of the company's original coal preparation unit was 281.39 yuan/ton, a year-on-year decrease of 16.38 yuan/ton, a decrease of 5.50%. Compared to comparable companies, the company's cost per ton of coal is at a lower level.

Changxie accounts for a relatively large share of the Shaanxi coal industry, and Changxie is ahead in the industry. The number of medium- and long-term coal contracts signed by the company in 2024 is comparable to 2023, accounting for nearly 60% of total output. Its stable share of Changxie makes coal operations more secure to a certain extent.

Entering the coal and electricity business. The integration of coal and electricity to increase profit stability and the acquisition of electricity assets is an important step for the company to establish an “integrated coal and electricity” operating model. It also conforms to the company's actual business needs and strategic development direction, and can extend the main coal industry chain and promote the company's high-quality development.

The high dividend highlights the investment value of 2024. Up to now, the company's total interim dividends have been calculated by combining the two interim profit distributions. The total cash dividend amount is 2.056 billion yuan, accounting for 12.90% of the net profit attributable to shareholders of the parent company achieved in the consolidated statement of the 2024 three-quarter report (unaudited). At the same time, the company promised that the cash dividend for 2022 to 2024 will not be less than 60% of the profit that can be distributed in that year, demonstrating the company's shareholders' confidence in return.

Risk warning: Risk of coal prices falling short of expectations, risk of safety accidents, risk of Ida's approval schedule falling short of expectations, risk of coal imports exceeding expectations, etc.