The company's asset impairment has declined significantly in 2020, and with the gradual production of new coal mines in Xinjiang and the improvement of the profits of the power sector, the company's performance will still increase in the future. Maintain the company's "buy" rating.
Net profit in 2020 increased by 16.35% compared with the same period last year, and the impairment returned to normal. The company's 2020 operating income is 7.654 billion yuan / net profit is 668 million yuan (year-on-year change + 0.41% Universe 16.35%), EPS is 0.92 yuan.
The scale of the impairment of the company's assets has declined for three consecutive years, and the impairment of assets in 2020 was only 12 million (year-on-year change-80.08%), indicating that the historical burden may have been basically resolved. The profit distribution plan for 2020 is 0.278 yuan per share (including tax), with a dividend rate of 30.2% and a corresponding dividend rate of 2.88%.
Commodity coal prices fell significantly in 2020, and the thermal power business sector made a profit. The company's coal production / sales volume in 2020 was 846.38 million tons respectively (year-on-year change + 4.05 million tons). The increase in output mainly came from the commissioning of 106coal mines in Xinjiang, contributing 944000 tons. The average selling price of coal in 2020 is 741.88 yuan / ton (year-on-year-25.7%), and the average cost of sales is 476.56 yuan / ton (year-on-year change-18.84%). The main declining items are material and power costs. In 2020, the company generated 3.728 billion kilowatt-hours (year-on-year + 6.88%), the power business turned from loss to profit, the unit electricity price was 0.39 yuan / kWh (year-on-year + 10.53%), the kilowatt-hour cost was 0.35 yuan / kWh (year-on-year-13.23%), and the gross profit margin rose to 10.01% (year-on-year + 24.64pcts).
There is room for the growth of resources in Xinjiang, and there is room for improvement in the electric power sector. The company has two coal resources in Xinjiang, namely 106coal mine (with a production capacity of 1.8 million tons) and Weizigou coal mine (with a production capacity of 2.4 million tons), of which 106coal mine was officially put into production in 2019, and Weizigou Coal Mine obtained a mining license in September 2019. In the future, as the two mines reach production, the company's coal production will still increase. In terms of the power sector, the company's 2 × 350MW cogeneration project was officially connected to the grid in mid-2019, using coal gangue and other low calorific value coal for power generation, the cost is expected to decrease significantly, with the increase in utilization hours in the future, it is expected that there is room for profit improvement.
Risk factors: product prices are greatly affected by the market; aluminum processing business continues to lose money.
Investment suggestion: combined with the latest coal price forecast, we raise the company's 2021-2022 EPS forecast to 1.28 RMB 1.16 yuan (the original forecast is 0.64 USD 0.79 yuan), and give the EPS forecast 1.23 yuan in 2023. The current stock price is 9.66 yuan, which corresponds to 8 times the PE of 21-year-old 23 years. Give the company a target price of 12.20 yuan, corresponding to 2021 PB0.8 times, maintain the "buy" rating.
