2024Q1 revenue increased steadily due to the increase in business volume such as power generation and transportation, and the decline in coal prices dragged down performance. In 2024Q1, the company achieved revenue of 87.65 billion yuan, +0.7% year on year, net profit to mother of 15.88 billion yuan, -14.7% year on year, net profit after deducting non-return to mother of 16.46 billion yuan, -11.2% year on year. The steady increase in revenue was mainly due to an increase in business volume such as power generation and railway transportation. The decline in performance was mainly due to a decline in coal prices.
Coal: Production/sales increased, and gross margin decreased due to falling coal prices and rising costs. 2024Q1's commercial coal production was 81.3 million tons, +1.5% year over year; coal sales were 117.1 million tons, +8.8% year over year, of which sales of self-produced commercial coal were 80.3 million tons, +1.1% year over year. The average sales price of 2024Q1 self-produced coal and outsourced coal was 533.3 yuan/ton and 659.4 yuan/ton respectively, down 39.1 yuan/ton and 98.1 yuan/ton, respectively. The production cost per unit of self-produced coal was 190.6 yuan/ton, compared with +21.2 yuan/ton. This is mainly due to the lower base of labor costs for the same period last year, and labor costs are calculated according to schedule in 2024Q1. In the end, self-produced coal and outsourced coal achieved gross profit margins of 44.3% and 2.2%, respectively, -5.1 pct and +0.8 pct year-on-year, respectively.
Electricity: Electricity generation/sales have increased steadily, and falling coal prices have improved costs. 2024Q1's total power generation capacity was 55.35 billion kilowatt-hours, +7.0% year over year; total electricity sales volume 52.16 billion kilowatt-hours, +7.0% year over year; average usage hours were 1236 hours, -3.7% year over year; average electricity sales price was 409 yuan/megawatt-hour, -2.6% year over year; unit electricity sales cost was 364.8 yuan/megawatt-hour, -3.0% year on year. A generator assembly capacity of 167 megawatts was added, including 80 megawatts of coal-fired generator assembly capacity and 87 megawatts of photovoltaic generator assembly capacity.
Transportation: Increased revenue and improved gross profit; good progress on multiple projects. 2024Q1 Railway Division, Port Division, and Shipping Division revenue were +5.9%/+5.6%/+7.4%, respectively; gross margin was +2.1pct/+5.4pct/+2.1pct, respectively. 2024Q1 Company Baoshen Railway shipped more than 20,000 boxes of large logistics containers, an increase of more than 30% over the same period last year; the Dongyue Railway project made positive progress in the EIA approval of the Dongshengdong to Taigemiao Railway; and Huanghua Port officially opened a container shipping business from Xiong'an New Area to Huanghua Port.
In April 2024, the company successfully launched the 30,000 ton heavy duty train of the Shuohuang Railway; it completed the investment decision for the fifth phase of the Huanghua Port Coal Port Area Project. It plans to build 4 70,000-ton berths at Huanghua Port, adding about 50 million tons/year of coal loading capacity, with a total investment of about 5 billion yuan. The construction period is about 2.5 years, and construction is scheduled to begin within 2024.
Investment advice: Maintain profit forecasts. Net profit due to mother for 2024-2026 is expected to be 602/611/61.5 billion yuan, and EPS is 3.0/3.1/3.1 yuan. The company is the world's leading coal-based integrated energy enterprise. It has seven business collaboration in production, distribution and marketing, strong performance stability, generous dividend returns, and maintains an “gain” rating.
Risk warning: The economic slowdown has led to a decline in demand for coal, the rapid development of new energy sources to replace demand for coal and electricity, the impact of production safety accidents, the release of the company's nuclear production capacity increase falls short of expectations, and the company's dividend rate falls short of expectations.