The company's Q2 performance has further recovered, but costs have also increased rapidly. The company is actively expanding coking coal resources outside the province, while investing in expanding PVC and fiberglass production capacity, long-term profitability may be optimized. We maintain the company's "overweight" rating.
The performance in the first half increased by 21.82% compared with the same period last year, an increase of nearly 2.1x from the same period last year. The company's operating income / net profit in the first half of 2021 was 12.968 million yuan (year-on-year change + 21.82% Universe 16.95%), EPS was 0.0456 yuan (year-on-year-29.08%), and net profit after deduction was 494 million yuan (year-on-year-12.29%).
Of this total, Q2's net profit per quarter was 498 million yuan (year-on-year change + 37.75%, month-on-month change + 209.79%).
Coal prices have increased significantly, but coal production and sales have declined compared with the same period last year. In the first half of the year, the company's raw coal production / sales volume was 1322.87 billion tons (4.80% compared with the same period last year). In terms of sales volume, the average sales price of the company's commercial coal is 652.84 yuan / ton (year-on-year + 21.63%). The price of raw coal / washed coal / washed coal is 348.45x1118.15x353.40 yuan / ton respectively (year-on-year changes are + 31.61% shock 15.84% shock 43.80%), and the sales cost is 502.62 yuan / ton (year-on-year + 25.83%). The increase in cost is mainly due to the transfer of some previous transportation expenses from sales expenses to cost item recognition. The gross profit margin of the coal business fell to 24.71% (- 2.52% compared with the same period last year). The company has acquired and increased capital in Azure Dragon coal industry in the past two years, and it is expected that after reaching production, it can increase the production capacity of high-quality coking coal by 900,000 tons per year.
Non-coal business: actively expand glass fiber production capacity, PVC project potential is expected. The company actively promotes the wire drawing project with an annual output of 200000 tons of glass fiber tank kiln. According to the previous announcement, the 100000-ton production line of the first phase of the project has been ignited for trial production in March 2021, and the second phase is under construction and is scheduled to be completed in March 2022. In the first half of the year, the glass fiber production / sales volume is 4.91 million tons (year-on-year change + 18.31% shock 22.61%). In the first half of the year, the company's coke production / sales volume was 83.33 million tons (year-on-year changes were + 2.03% 5.92/+8.36pcts 2.29%), and the gross profit margin of the power / building materials business was 16.94% (year-on-year). The power business is still in a state of loss. At the same time, the company is building a 400000-ton PVC project, which is expected to show economies of scale and improve the profitability of chemical products after it is put into production in the future.
Risk factors: macroeconomic slowdown affects coal prices; environmental protection pressure in Beijing-Tianjin-Hebei region affects coal demand; profit contribution of new projects is lower than expected.
Investment advice: considering the latest cost control level, we raise the company's EPS forecast for 2021 2023 to 0.42, 0.39, and 0.43 yuan (the original forecast is 0.30, 0.27, 0.26); the current stock price is 4.49, corresponding to 10.7, 11.5, 10.4x, respectively. According to the long-term sector valuation level, we give the company a target price of 6 yuan, corresponding to 2021 P/B1x, to maintain the company's "overweight" rating.
