Key points of investment
Incident: The company announced net profit of 5.173 billion yuan in 2023, down 54.37% year on year; 2023Q4 net profit of 323 million yuan, down 89.01% year on year and 55.73% month on month; plan to distribute a cash dividend of 0.7 yuan/share in 2023.
Coal: Production and sales have continued to grow, and falling prices have led to a decrease in gross profit. The coal sector achieved operating income of 14.7 billion yuan (accounting for 23.95%), gross profit of 5.1 billion yuan (accounting for 50.83%), and a gross profit margin of 34.68% (a year-on-year decrease of 9.53 pcts). In terms of production and sales volume, raw coal production was 22.31 million tons, up 9.13% year on year; raw coal sales were 25.88 million tons, up 13.30% year on year; upgraded coal production was 4.06 million tons, up 12.21% year on year; and improved coal sales were 5.11 million tons, up 32.45% year on year. In terms of price, the price of a ton of coal in 2023 was 475 yuan/ton, down 16.64% year on year, the cost of a ton of coal was 310 yuan/ton, down 2.41% year on year, and gross profit per ton was 165 yuan/ton, down 34.59% year on year. The infrastructure for the Malang coal mine has been completed, and it is expected to drive the company's coal production to maintain rapid growth after it is put into operation.
Natural gas: Sales continued to grow, and falling prices led to a decrease in gross profit. The natural gas sector achieved operating income of 38.4 billion yuan (accounting for 62.41%), gross profit of 3.1 billion yuan (accounting for 30.97%), and a gross profit margin of 8.11% (a year-on-year decrease of 12.28 pcts). In terms of production and sales volume, natural gas production was 580 million square meters in 2023, a year-on-year decrease of 26.05%; sales volume was 8.684 billion square meters, an increase of 30.99% over the previous year. In terms of price, the price of natural gas was 4.42 yuan per party in 2023, down 15.01% year on year, and gross profit per party was 0.36 yuan, down 66.97% year on year.
Coal chemical industry: Methanol production and sales declined, and rising costs led to a decrease in gross profit. The coal chemical sector achieved operating income of 7.7 billion yuan (accounting for 12.46%), gross profit of 1.8 billion yuan (accounting for 18.03%), and a gross profit margin of 23.65% (down 11.09pcts from the previous year). In terms of production and sales, methanol, ethylene glycol, coal-based oil products, and coal chemical by-products achieved output of 91.09/12.65.02/3592 million tons, a year-on-year change of -19.13%/+24.93%/+4.4%/-17.98%; achieved sales volume of 111.3/12.58/68.96/705,000 tons, a year-on-year change of -19.63%/+24.93%/+3.72%/-24.44%. In terms of price, the average price of coal chemical products in '23 was 2,842 yuan/ton, down 0.13% year on year. The cost per ton was 2,169 yuan/ton, up 16.83% year on year, and gross profit per ton was 672 yuan/ton, down 32.01% year on year.
Dividends: Fulfill the dividend promise with a dividend rate of 9.14% in 2023. In 2023, the company plans to distribute a cash dividend of 0.7 yuan/share. The total cash dividend to be distributed this time is 4,547 billion yuan, accounting for 87.90% of the company's net profit attributable to shareholders of listed companies in 2023, fulfilling the dividend promise. Based on the closing price on April 22, 2024, the 2023 dividend rate is 9.14%. The higher dividend level guarantees the company's long-term investment value.
Investment advice: Since the company's Malang project fell short of expectations, we lowered our profit forecast. We expect net profit to be 60.69/70.81/8.232 billion yuan in 2024-2026. The current stock price corresponds to PE of 8.29/7.10/6.11 times, maintaining a “buy” rating.
Risk warning: Economic recovery falls short of expectations, capacity release falls short of expectations, LNG prices fall short of expectations.