Event: on August 21, 2023, the company released its half-yearly report for 2023. In the first half of 2023, the company achieved operating income of 4.456 billion yuan, down 32.08% from the same period last year, and its net profit was 916 million yuan, down 56.15% from the same period last year. In the second quarter of 2023, the company achieved operating income of 1.989 billion yuan, down 42.25% from the same period last year and 19.38% from the previous year; the net profit from the home was 154 million yuan, down 84.13% from the same period last year and 79.87% from the previous year.
The weakening price of coke is a drag on the company's performance, and the investment income of Huajin coking coal decreased compared with the same period last year. 23H1 coke market as a whole showed a downward trend, especially steel prices weakened in the second quarter, coal prices declined, demand and costs weakened synchronously, coke prices fell for many rounds, and the company's coking business profits were damaged. In terms of long-term equity investment, the company owns 49% of China Coal Huajin, and its main coal products are lean coal and anthracite sold on the spot. The spot price of 23H1 coking coal has declined, affecting the company's investment income in China Coal Huajin fell 21.94% to 1.785 billion yuan compared with the same period last year.
Coke production and sales decline, cost reduction is less than the selling price, profit is damaged. 23Q2 achieved coke production of 694400 tons, down 24.71% from the same period last year and 6.26% from the previous year; coke sales were 698800 tons, down 24.31% from the same period last year and 4.42% from the previous year. The average selling price of coke in 23Q2 Company was 1952.19 yuan / ton, down 34.06% from the same period last year and 21.67% from the previous year; the unit purchasing cost of coking coal was 1570.18 yuan / ton, down 30.36% from the same period last year and 20.45% from the previous year.
The price of chemical products has dropped compared with the previous month. The price of asphalt, the main chemical product of 23Q2, fell 26.31% from the same period last year, 31.49% from the previous year; the price of industrial naphthalene rose 0.33% from the same period last year, 14.12% from the previous year; the price of methanol fell 15.33% from the same period last year, and 9.24% from the previous year; the price of carbon black fell 26.53% from the same period last year, 25.06% from the previous year; and the price of pure benzene decreased by 21.25% from the same period last year, and 1.00% from the previous year.
Replace the backward production capacity and solve the competition in the same industry in accordance with the group's commitment. Due to the decline in equipment performance of the company's coke ovens in operation for many years, and combined with the industrial park planning and environmental protection emission control of the company, the company plans to replace the 900,000 tons / year coking capacity of the coke ovens with Shan Coking Group. The Coking Coal Group integrates its 844,000 tons / year coking capacity and builds a 174.4 million ton / year coking upgrading project in Fenyang Sanquan Coking Park. This capacity replacement will not affect the normal operation of the coke oven and the normal production of the company. After the upgrading project is completed and put into production, the coke oven will be shut down and eliminated. With regard to the problem of inter-industry competition caused by capacity replacement, the Coking Coal Group will follow the "commitment on the Integration of Internal Coking Business" issued on December 9, 2020.
Implementation, that is, Shanxi Coking is used as the integrated development platform for the production and operation business of coke and related chemical products within the group, the coking enterprises or related assets and businesses controlled by the group are gradually integrated by means of acquisition and merger, business transfer, asset injection, entrusted operation, etc., and the efficiency and scale of the company's coking business are expected to be improved in the future.
Investment suggestion: taking into account the decline in coke prices of the company's main products and the decline in investment income of China Coal Huajin compared with the same period last year, we estimate that the company's return net profit in 2023-2025 will be RMB 15.162048x295 million, corresponding to EPS 0.59 pm 0.80pm 0.90, and PE corresponding to August 21, 2023, respectively, times that of 9-6-6.
Maintain the "cautious recommendation" rating.
Risk hint: macroeconomic growth is lower than expected; China Coal Huajin investment income is not as expected; coke price fell sharply.