Introduction to this report:
Sales in the coal sector were stable in 23 years, and sales bucked the trend in 24Q1; coal chemical and power generation businesses operated steadily; maintained high dividends, and the investment value was prominent.
Key points of investment:
Maintain an “Overweight” rating. In 2023, the company achieved revenue of 150,025 billion yuan (-33.31%) and net profit of 20.04 billion yuan (-39.62%); in the first quarter of 2024, the company achieved revenue of 39.633 billion yuan (-20.76%) and net profit to mother of 3.757 billion yuan (-41.85%), lower than market expectations. Considering the decline in market prices in the first quarter of 2024, we lowered the 2024-2025 EPS to 2.60, 2.82 (previously 3.10, 3.39), and added 2026 EPS 3.06. According to the comparable company's 24-year average valuation of 10.77xPE, the target price was raised to 28.00 yuan (+6.24 yuan).
Sales in the coal sector have been stable for 23 years, and sales bucked the trend in 24Q1. The company produced 132 million tons of commercial coal in '23 (+0.61%), produced 346.35 million tons (+15.43%) in 24Q1; sold 127 million tons (-6.21%) in '23, and sold 341.84 million tons (+7.11%) in 24Q1. The price of a ton of coal in '23 was 803 yuan/ton (-274 yuan/ton), and the price of a ton of coal in 24Q1 was 727 yuan/ton (-300 yuan/ton); the cost of a ton in '23 was 320 yuan/ton (+4 yuan/ton), and the cost of a ton in 24Q1 was 445 yuan/ton (+4 yuan/ton). As thermal coal prices are revealed at the bottom of mid-late April and overseas coal prices are supported against the backdrop of high crude oil prices, it is expected that the downward pressure on Q2 companies' prices will ease, and the decline in performance is expected to narrow markedly.
The coal chemical and power generation business is operating steadily. Coal chemical sales in '23 were 7.862 million tons, and sales volume in 24Q1 was 2.164 million tons, which was basically the same as the previous year; sales revenue in '23 was 26.398 billion yuan, and sales revenue in 24Q1 was 6.258 billion yuan (-4%), and the overall sector operated steadily.
High dividends, outstanding investment value. The company announced the 2023-2025 profit distribution guidelines in June 2023, promising that the 2023-2025 dividend ratio will not be less than 60%. The 2023 annual report dividend of the company was 1.49 yuan per share, with a dividend rate of 55%.
Risk warning: The price of coal fell more than expected; the price of coal chemical products fell more than expected.