Event description
The company released the third quarterly report of 2023: the net profit in the first three quarters of 2023 was 3.916 billion yuan, down 1.73% from the same period last year. The net profit in the third quarter of 2023 was 549 million yuan, down 61.17% from the same period last year, and 17% from the previous year.
Event comment
The decline in coal prices led to a decline in gross profit. In the coal business, the company's coal production was basically stable in the first three quarters of 2023, but revenue fell 30% in the first three quarters compared with the same period a year earlier due to falling coal prices. In the first three quarters of 2023, the central price of coking coal fell significantly due to the easing of the global energy crisis, weaker demand, and the increase in the number of vehicles with superimposed Mongolian coal imports from Australia. In the first three quarters of 2023, the plate price of the main coking coal in Hebei area was 2126 yuan / ton, down more than 500 yuan / ton compared with the same period last year, while the thermal coal price in the producing area was also affected by high inventory and demand pressure, so overall, the company's revenue declined greatly. However, in terms of cost, the company's operating costs fell by 31% in the first three quarters of 2023 due to the reduction in the amount of coal washed out in the current period. As a result, the company's gross profit decreased by 2.6 billion yuan in the first three quarters. In the third quarter alone, the plate price of the main coking coal car in Hebei was 1804 yuan per ton, down 29% from the same period last year and 11% from the previous month. In the third quarter alone, revenue fell by 1.2 billion yuan, costs by 800 million yuan, and gross profit by about 400 million yuan in the third quarter.
Non-recurring gains and losses significantly increase the performance of the company. Benefiting from the increase in non-recurrent profit and loss of about 16-1.7 billion yuan from the sale of the company's entire equity stake in Hebei Jinniu Chemical Co., Ltd., the company's performance increased significantly in the first three quarters of 2023. In addition, 72% of the company's stake in Qianxin Coal Industry is also planned to be transferred to Hainan Menghong, which is expected to further enhance the company's performance.
The proportion of dividends reached 79%, and the undervalued value of high dividends was highlighted. In view of the overall stability of the company's capital expenditure in recent years, the rising coal price center and the increased pressure on shareholders to repay debts, the company's dividend is expected to remain high; and the company's "shareholder return Plan 2023-2025" that "in the future, the annual distribution of profits in the form of cash will not be less than 35% of the distributable profits realized in that year" also provides a certain guaranteed income. At the valuation level, the company's current stock price corresponding to the valuation safety pad is obvious, and the undervalued value of high dividend is prominent.
From the growth point of view, the company still has room for quantitative growth. In the listed company, 600000 tons of Xingtai Mine West well is expected to be put into production in the second half of 2023, and the type of coal is 1 stroke and 3 coke, which is expected to bring an increase in output of 10-300000 tons; in addition, the nuclear production capacity of 1.5 million tons in the Mongolian mining area in 22 years may also increase the company's 23-year coal production to a certain extent. At the group level, there are still unlisted coal-producing minerals with a capacity of more than 20 million tons and 10.1 million tons under construction. In the future, the group mine will either become the company's reserve asset or become the driving force for the company's continuous improvement in performance.
Investment advice and valuation: the company's EPS in 2023-2025 is expected to be 1.28,1.12and 1.16yuan respectively, corresponding to PE 5.07x, 5.82x and 5.60x respectively, maintaining the company's "buy" rating.
Risk hint
1. The slowdown in macroeconomic growth affects the demand for coal.
2. The release of new coal production capacity in the industry has a great impact on coal prices.