17 years of asset impairment losses affect profits, 18Q1 performance increased by 105% compared with the same period last year
The company achieved a net profit of 520 million yuan in 2017, up 15% from the same period last year, or 0.72 yuan per share. In the whole year, the company confirmed the impairment loss of assets of about 770 million yuan (of which about 520 million yuan was prepared for the impairment of intangible assets for the mining rights of Yuquan coal industry).
Quarterly net profit of 17Q1-4 is 170 million yuan, 210 million yuan, 240 million yuan and-100 million yuan respectively (the impairment loss of assets recognized by Q4 is about 360 million yuan), and the EPS in a single quarter is 0.23,0.30,0.34 yuan and-0.14 yuan respectively.
The company's 18Q1 realized a net profit of 340 million yuan, an increase of about 105 percent over the same period last year, or 0.47 yuan per share, mainly due to high coal prices and a year-on-year increase of about 28 percent in commercial coal sales.
In 17 years, coal, electricity and aluminum contributed net profits of 5.9,3.50 and-100 million yuan, respectively.
Coal business: the net profit of coal division was 590 million yuan, an increase of 229% over the same period last year. The company produced 7.86 million tons of raw coal, down 6% from the same period last year; washed coal 5.42 million tons, down 9% from the same period last year; and sold 5.46 million tons of commercial coal, down 20% from the same period last year. According to coal sales revenue and cost estimates, the company's revenue per ton of coal is 913 yuan, up 65% from the same period last year; the cost per ton of coal is 503 yuan, up 26% from the same period last year; and the net profit per ton of coal is about 108 yuan (about 27 yuan in 16 years). 18Q1 produced 2.03 million tons of raw coal and 1.56 million tons of washed coal, up 4 percent and 24 percent respectively over the same period last year. Sales of commercial coal were 1.47 million tons, up 28 percent over the same period last year, with a net profit of more than 230 yuan per ton of coal.
Electric power business: the loss of electric power business in 17 years is about-350 million yuan (profit in the same period of 16 years is 170 million yuan). The total generating capacity is 2.4 billion kWh, an increase of 2% over the same period last year, and the kilowatt-hour profit is about-0.15 yuan. The operating income of the electric power business reached 600 million yuan, an increase of 9% over the same period last year, and the operating cost was 830 million yuan, an increase of 99% over the same period last year. The power generation of 18Q1 is about 500 million kilowatt-hours, down 18% from the same period last year.
Aluminum business: the aluminum products business continued to reduce losses in 17 years, with an annual loss of about 95.44 million yuan. Aluminum processing output was 24000 tons, a decrease of 28% over the same period last year. The operating income was 380 million yuan, down 24% from the same period last year, and the operating cost was 430 million yuan, down 26% from the same period last year. The processing volume of 18Q1 aluminum is about 50,000 tons, down 2% from the same period last year.
With a total capacity of about 6 million tons, it is proposed to transfer municipal community facilities and "three supplies and one industry" assets
Coal business: according to the annual report, the company has three pairs of coal production mines (Xuzhuang, Kongzhuang and Yaoqiao), with an annual approved capacity of 8.05 million tons and a production capacity of 6 million tons under construction. In the construction of Xinjiang Weizigou Coal Mine (production capacity of 3 million tons), the current investment is 2.94 million yuan, 35% of the planned investment has been completed; 106 coal mines (1.8 million tons) will be built by stages, the scale of the first phase is 1.2 million / ton, and the progress of the project will reach 96%. Mining licenses for the above two projects are being processed. The reconstruction and expansion of Yuquan Coal Mine (with a production capacity of 1.2 million tons) has completed a total investment of 66%.
Power business: at present, the company has installed 444MW in thermal power plant, and the new Datun 2 × 350MW coal gangue cogeneration unit project is under construction. Datun Electric heating, a new wholly-owned subsidiary, is expected to help expand the business of selling electricity in the future. In addition, the company plans to transfer its municipal community facilities assets and "three supplies and one industry" assets at a transfer price of 160 million yuan. According to the agreement, the asset transfer is expected to be completed by October 31, 18, which is expected to lighten the burden on the company in the future.
Profit Forecast and Investment rating
The company's future focus is mainly on the release of coal production capacity under construction (a total of 6 million tons) and the expansion of the power business. We expect the company's raw coal output to increase slightly in 2018, and the scale of electrolytic aluminum and power business to remain relatively stable. It is estimated that the EPS in 2018-2020 will be 1.34,1.34 and 1.35 yuan respectively, corresponding to 8 times of PE in 18 years. The company has a low valuation and maintains a "cautious overweight" rating.
Risk hints: macroeconomic growth is lower than expected, coal prices fall faster than expected, progress in coal mine and power plant construction is lower than expected, and corporate costs rise too quickly.