In 2020, the company was affected by the decline in chemical prices, the main business still showed a state of loss, and the performance growth mainly depended on the contribution of investment income in the mine. Coke and chemical prices are expected to improve significantly in 2021, but there is still uncertainty about whether the chemical sector can reverse losses and maintain the company's "overweight" rating.
Net profit rose 131.40% in 2020 compared with the same period last year, and the profit mainly came from investment income. The company's operating income / net profit in 2020 was 7.101 billion / 1.097 billion yuan respectively, compared with the same period last year. The company's net profit in Q4 was 169 million yuan per quarter, and the company's operating income / net profit in 2020 was 0.55 yuan / 1.097 billion yuan, respectively, compared with the same period last year. The increase in annual performance was mainly due to the increase in investment income of China Coal Huajin Coking Coal Mine, which was confirmed to be 1.58 billion yuan, mainly corresponding to the contribution of Huajin Coking Coal of China Coal, an increase of 15.67% over the same period last year. Excluding investment income, the company's main coking business is still losing money. The profit distribution plan of the company is 0.2 yuan per share, and the corresponding dividend rate is about 3.1%. At the same time, it will increase 3 shares for every 10 shares.
The company's coke sales increased by 14.28% in 2020, and the decline in unit cost led to a significant pick-up in gross profit margin. The company's 2020 coke production / sales volume was 333.54 million tons respectively (+ 14.03% plus 14.28% per unit cost); the coke selling price / unit cost was 1507.85 yuan / ton (year-on-year changes were-1.48% and 9.07% respectively). Thanks to effective cost control, the gross profit margin of the coke business increased by 7.39pcts to 11.52%.
The company produced 284000 tons of processed coal tar (- 9.61% compared with the same period last year), mainly due to parking maintenance in February and April 2020. It is expected that in 2021, against the background of a substantial improvement in coke prices, the company's coke business gross margin will further improve. Under the assumption that coke prices will rise by 15% and costs by 10%, the gross profit margin is expected to rise to nearly 17%. Gross profit is expected to increase by 470 million yuan compared with the same period last year.
The chemical business will be dragged down by prices in 2020 and is expected to significantly reduce losses in 2021. The company's comprehensive sales volume of the chemical sector increased by 78700 tons in 2020. However, the price fell sharply, with the average sales price of carbon black, methanol and coking benzene down 20%, 15%, 23%, respectively, compared with the same period last year, with a significant loss, with a gross profit loss of more than 150 million yuan. However, it is expected that with the significant improvement in oil prices in 2021, chemical prices have risen sharply, and the company's chemical sector revenue growth is expected to exceed 20% for the whole year. Although the methanol sector gross profit is very difficult to become a positive, it is expected that the loss can be effectively reduced. The chemical sector may be able to greatly reduce losses.
Risk factors: Coke prices fluctuated sharply; the chemical sector is still difficult to reverse losses.
Investment suggestion: considering the sharp rise in the price of coke and chemical products in 2021, we raise the company's 202112022 EPS forecast to 0.94 EPS 0.64 yuan (the original forecast 0.36pm 0.55 yuan), and give the 2023 EPS forecast 0.65 yuan, the current price 6.37 yuan, corresponding to 2021 2023 PE7/10/10x. We give the company a target price of 7.6 yuan, corresponding to P/E8 x in 2021. It will take time to consider the systematic recovery of profits in the company's chemical sector, and we maintain the company's "overweight" rating.
