Event description
The company today released its quarterly report for 2016. During the reporting period, the company achieved operating income of 686 million yuan, down 47.13% from the same period last year. The net profit attributed to the parent company was-137 million yuan, down 14887.27% from the same period last year.
Event comment
Production and sales grew negatively in the first quarter compared with the same period last year. In the first quarter, the company's raw coal output was 790000 tons, down 640000 tons from the same period last year, or 44.8 percent, and commercial coal sales were 850000 tons, down 410000 tons, or 32.5 percent, from the same period last year.
Production and marketing weakness is mainly due to the decline in demand in the first quarter compared with the same period last year, and Jiangxi Province may also have something to do with the impact of transfer from other provinces.
The price of coal is weak and the cost is rigid, and the gross profit of tons of coal turns to a loss in the first quarter. In terms of commercial coal sales, the company sold 326.59 yuan per ton of commercial coal in the first quarter of 2016, down 129.63 yuan from the same period last year. The weakness in coal prices is mainly due to the intensification of loose supply and demand in the industry since 2015 and the decline in coal prices. In the first quarter, the cost of commercial coal per ton of the company was 389.98 yuan, up 21.72 yuan, or 5.90 percent, over the whole of 2015. The rise in costs should be partly due to the increase in fixed costs per ton of coal after the decline in production and sales. The rise of weak superimposed costs of coal prices greatly suppressed the profitability of the company's coal business. In the first quarter, the company lost 63.39 yuan in gross profit per ton of commercial coal, down 151.36 yuan from the same period last year.
During this period, the cost control is better. In the first quarter, the company's expenses during the period totaled 110 million yuan, down 14.73% from the same period last year, of which sales expenses, management expenses and financial expenses decreased by 12.50%, 28.30% and 1.92% respectively. On the whole, the cost control during the company period is better.
The loss in the first quarter was mainly due to the fall in coal volume and price. In the first quarter, the company achieved operating income of 686 million yuan, down 47.13% from the same period last year, and operating costs were 707 million yuan, down 38.34% from the same period last year. Taking into account the decline in production and sales, the increase in costs is due to the rising cost of tons of coal. The gross profit loss in the first quarter was 21 million yuan, down 208 million yuan from the previous quarter, which was the main reason for the loss of attributable net profit in the first quarter.
The growth potential of the traditional main business is limited, and the focus is still in transition and supply-side reform. Affected by the overall weak demand of the industry, the general resource endowment of Jiangxi Province and the impact of low-cost supply in other provinces, the company's main coal industry is under great pressure to reverse losses, and the supply-side reform is expected to promote cost reduction.
The main focus of the company is still the transformation of Internet finance. Pay attention to the transformation and the follow-up progress of supply-side reform in Jiangxi Province. We forecast that the company's EPS in 16-18 will be 0.03,0.04,0.05 yuan respectively, maintaining a "buy" rating.
Risk hint: macroeconomic decline sharply, supply-side reform is lower than expected