The company continued to lose money in 2020, and profits from the main business improved slowly. However, the company is already actively investing in emerging energy fields such as coalbed methane, wind power, and hydrogen energy, and its stock price is also relatively active. Plans to acquire all of the shares of the Liaoning Clean Energy Group have been suspended, and the future transformation and development of the company is worth looking forward to. However, considering that it is difficult to expect a significant increase in the profit of the company's current business, it is difficult to maintain the company's “hold” rating.
Net profit after deduction in 2020 was still at a loss, and 2021Q1 net profit turned a loss into a profit. The company achieved operating income/net profit of 505/-467 million yuan in 2020 (year-on-year changes -24.44%/-1881.86%, respectively); net profit after deduction was -488 million yuan, which was in a state of loss. Deducted non-net profit in 2019 was also negative, and there was no systematic improvement in profit in 2020. EPS is -0.35 yuan. The company achieved operating income/net profit of 1,631/39 million yuan in the first quarter of 2021, net profit of 27 million yuan after deduction of net profit, and turned a loss into a profit after deduction of non-net profit in the first quarter.
Coal sales increased slightly in 2020, and gross margin declined sharply. The company's coal production/sales volume in 2020 was 561/5.74 million tons (-4.75%/+0.96% year-on-year); of these, raw coal production/sales were 2,465/2,453,000 tons (-0.80%/-1.00% compared to the same period), and coal washing production/sales were 31438/3.2871 million tons respectively (year-on-year changes of -7.63%/+0.94%, respectively). In terms of price, the company's comprehensive sales price of commercial coal in 2020 was about 549.82 yuan/ton (-11.91% compared to the same period last year); the production cost of one ton of coal was about 479.23 yuan/ton (-0.67% year-on-year).
The gross margin of the coal business was 12.84%, a year-on-year decrease of about 43.46 pcts. The company generated and sold 2,651/2326 million kilowatts of electricity in 2020 (-0.53%/-0.83% year-on-year), and the electricity price/cost per kilowatt hour was 0.34/0.35 yuan. The power sector as a whole was in a state of loss. The company plans to sell 6 million tons of commercial coal and 2,733 million kilowatts of feed-in electricity in 2021, up from actual values in 2020. It is expected that in the context of a sharp rise in the volume and price of coal in 2021, the company is expected to reverse losses.
Actively acquire shares in clean energy companies to achieve diversified development. The company is actively building a new energy investment company with innovative vitality and the ability to continuously generate efficiency and increase profits, and has actively invested in emerging energy fields such as coalbed methane, wind power, and hydrogen energy. The company plans to purchase all of the shares of Liaoning Clean Energy Group Co., Ltd. by issuing shares to actively arrange diversified energy development.
Risk factors: High cost fluctuations; macroeconomic fluctuations affect coal demand and performance growth.
Investment advice: Considering the company's loss situation in 2020, we lowered the company's 2021-2022 EPS forecast to 0.08/0.05 yuan (the original forecast was 0.12/0.11 yuan) and gave the 2023 EPS profit forecast of 0.02 yuan. The current price is 3.59 yuan, and the corresponding P/E is 46/79/153x. Considering that it is difficult to systematically improve the profit of the company's existing assets, maintain the company's “hold” rating. A target price of 3.80 yuan was given, corresponding to P/B1x in 2021.