Incident: The company released its 2023 annual results report. In 2023, it achieved operating income of 30.120 billion yuan (-15.29%, adjusted, same below); realized net profit attributable to listed companies of 2,266 billion yuan (+18.67%), after deducting non-net profit of 2,359 billion yuan (+41.73%); and achieved basic earnings per share of 0.102 yuan (+18.74%). The 2024 Q1 results achieved revenue of $7.321 billion (+3.58%), net profit of 467 million yuan (+11.41%), and net profit of 471 million yuan (+12.04%) after deducting non-net profit of $471 million (+12.04%).
In the coal sector, volume price increases and profits have remained steady in 2023, and coal mine projects under construction are progressing smoothly. The coal sector achieved revenue of 12.418 billion yuan (-9.30%) and operating costs of 6.232 billion yuan (+16.04%) in 2023. In terms of production, it achieved raw coal production of 12.9723 million tons (+17.58%) and refined coal production of 3.2899 million tons (-2.30%); in terms of sales, the company sold 12.9937 million tons of raw coal (+17.98%) in 2023, achieving sales of 3.276 million tons (-3.27%) of refined coal. In 2023, the sales price of coal decreased compared to the same period last year. The sales price of commercial coal produced by the company was 697 yuan/ton (-18.20%), the cost of self-produced commercial coal was 312 yuan/ton (-9.79%), the gross profit of self-produced commercial coal was 385 yuan/ton (-33.35%), and the gross margin reached 55.25% (-7.31 pct). The company's raw coal production and sales volume in the first quarter was 2,3952/2.3742 million tons, up 0.49%/-1.79% year on year, and continued to be steady. The company currently has 15 coal mines with a total production capacity of 17.1 million tons/year. The construction of the Haizetan thermal coal mine project in Shaanxi is progressing smoothly in 2023. It is planned that the conditions for coal production will be met in the third quarter of 2026, and production will be achieved in 2027.
Raw material costs have declined, and the power sector's performance has been drastically reversed, and the advantages of integrated coal and electricity have been highlighted. In 2023, the company's electricity sector revenue was 16.711 billion yuan (+6.28%), and operating costs were 14.926 billion yuan (-11.18%). Achieved a power generation capacity of 37.349 billion kilowatt-hours (+4.16%); in terms of sales, sales volume of 35.391 billion kilowatt-hours (+4.10%). The unit price of electricity sales is 0.47 yuan/kilowatt-hour (+2.09%), the cost of electricity production is 0.42 yuan/kilowatt-hour (-14.68%), and the gross margin is 10.68% (+17.55pct). The company's electricity business was affected by the year-on-year decline in raw coal prices. Compared with the same period last year, losses were reversed, and the advantages of integrated coal and electricity were prominent.
Accelerate the transformation of the field of new energy storage, and cultivate new energy storage technology for all-vanadium liquid flow batteries. The company focuses on the entire vanadium liquid flow battery industry chain. In 2023, the company started construction of the 6000 tons/year high-purity vanadium pentoxide metallurgical preparation production line (first phase 3,000 tons/year) as scheduled at the end of June 2023, and the first phase of the project is expected to be put into operation in the fourth quarter of 2024. In terms of the vanadium battery production project, the 1000MW all-vanadium liquid flow battery energy storage equipment manufacturing base (Phase I 300MW) of Zhangjiagang Detai Energy Storage Equipment Co., Ltd., which belongs to the company, began construction in June 2023. The first phase of the project is expected to be put into operation in the fourth quarter of 2024. Accelerating the transformation and development of the energy storage sector, actively exploring new directions of energy storage development, and deepening upstream and downstream links in the industrial chain is expected to enhance the company's core competitiveness and long-term profitability.
Profit forecast and investment rating: The company's net profit from 2024 to 2026 is estimated to be 26.7/27.7/2.84 billion yuan, respectively, and the PE corresponding to the current stock price is 11.1/10.7/10.5 times. Considering the company's integrated operation of coal and electricity, its performance has remained steady, and the company's shareholding increase rating has been maintained.
Risk warning: macroeconomic growth falls short of expectations; coal prices have dropped sharply; coal production and sales fall short of expectations and slow progress in construction projects, etc.