The gross profit in the second quarter decreased by 40 million yuan compared with the previous quarter, with a year-on-year increase of 190 million yuan. The company expects the gross profit of the coal business in the first half of the year to be-230 million yuan, compared with 340 million yuan in the same period last year; the company's gross profit in the first quarter is-130 million yuan, and the gross profit in the second quarter is estimated to be-90 million yuan. The company made a net loss of 470 million yuan in the first quarter, equivalent to a loss of 0.20 yuan per share.

In the first half of the year, commercial coal output fell 30% year on year, gross profit per ton coal-39 yuan / ton the company's first half commercial coal production 5.76 million tons, down 30% from the same period last year; sales volume of commercial coal was 5.8 million tons, down 21% year on year; price per ton coal was 200 yuan / ton, down 22% year on year; coal cost per ton was 239 yuan / ton, up 14% year on year; gross profit per ton coal was-39 yuan / ton, compared with 42 yuan / ton in the same period last year.

In the second quarter, the company's commercial coal output was 3.61 million tons, down 13% from the same period last year; the sales volume of commercial coal was 3.81 million tons, up 5% from the same period last year; the price per ton of coal was 192 yuan / ton, down 19% from the same period last year; the cost per ton of coal was 216 yuan, up 4% from the same period last year; gross profit per ton of coal was-25 yuan per ton, compared with 23 yuan per ton in the same period last year.

At present, two main mines have stopped production, with a production capacity of 6.1 million tons / year, and the company has approved a production capacity of 1780 million tons / year, of which two main mines have stopped production. Qianqiu mine (capacity of 2.1 million tons / year) has experienced three times of rock burst, so it is difficult to resume production in the future. Gengcun Coal Mine (with a capacity of 4 million tons / year) has stopped production since December 22, 2015 due to a fatal accident.

There will be more room for asset injection in the future, and the approved production capacity of Henan Energy Group, the controlling shareholder of the group, will reach 103 million tons. Among them, the smokeless coal mine under Yong Coal Holdings is superior to Yi Coal Group in terms of coal quality. We expect Dayou Energy to become a coal listing platform for the new group in the future, but we need to coordinate the interests of all parties within the group.

It is estimated that the company's EPS earnings per share in 2016-18 are-0.57,0.02 and 0.03 yuan, although the company has more room for epitaxial growth, but there is uncertainty in asset injection, and the company's current valuation is high, and we maintain the "hold" rating.

Risk hint

Group interests affect the rhythm of asset injection; the CSRC is filing a case for review of the company.