Incidents:
On May 31, 2024, China Coal Energy issued the “Notice on Receiving Proposals from Controlling Shareholders for the Company to Implement Special Dividends and 2024 Interim Dividends”:
On the basis of the 2023 annual profit distribution plan already formulated by the company, China Coal proposes to distribute a cash dividend of 1.5 billion yuan to all shareholders, based on a total share capital of 13,258,663,400 shares as of December 31, 2023, and a cash dividend of RMB 0.113 (tax included) per share; it is proposed that the board of directors of the company request the shareholders' meeting to authorize the board of directors to formulate and implement the 2024 mid-term dividend in accordance with the shareholders' meeting resolution According to the plan, it is recommended that the dividend amount not be less than 30% of the net profit attributable to shareholders of the listed company in the first half of 2024 (whichever amount is lower under Chinese corporate accounting standards and international financial reporting standards), and not more than the net profit attributable to shareholders of the listed company during the corresponding period. China Coal promised to vote “yes” when the company's shareholders' meeting considers such matters.
Investment highlights:
Assuming that the company's net profit for the first half of 2024 is 10 billion yuan, and the mid-term dividend is in the range of 30-10 billion yuan. As of mid-2024, the total amount after the special dividend is expected to be 45-11.5 billion yuan. Based on a total share capital of 13.26 billion shares, the corresponding dividend per share is 0.339-0.867 yuan (tax included), corresponding to the current dividend rate of 2.6% to 6.5% (closing price on May 31).
The company has plenty of cash on its accounts, and the balance and liability structure continues to be optimized. By the end of March 2024, the company's monetary capital was about 90.5 billion yuan, and the net monetary capital was 19.8 billion yuan. The balance ratio continued to decline, from 55.74% at the end of 2021 to 46.15% at the end of March 2024, and the company's dividend base was gradually consolidated.
The company's multi-industry layout simultaneously expands and has strong growth potential, improving and strengthening the comprehensive energy service industry. Coal sector: 1) By the end of 2023, the East Open Pit Mine and Anjialing Open Pit Coal Mine, which belong to the company, have obtained approval to increase coal production capacity by a total of 10 million tons/year; 2) By the end of 2023, the construction scale of the Dahaize Coal Mine was adjusted from 15 million tons/year to 20 million tons/year, and the Libi Coal Mine (4 million tons/year) is expected to enter trial production by the end of 2025, and the Weizigou Coal Mine (2.4 million tons/year) is expected to be put into operation by the end of 2025. Coal chemical sector: As of the end of 2023.
The Yulin coal deep processing base project has a construction scale of 900,000 tons/year of polyolefin. The investment decision has been approved and completed, and construction is scheduled to begin in 2024. Power sector: By the end of 2023, 1) Antaibao 2×350MW low calorific value coal power generation project, construction scale 2×350MW, two units will be completed and put into operation in 2024; 2) Wushenqi power plant project, with a construction scale of 2×660MW. The investment decision has been approved and completed, and construction is scheduled to begin in 2024; 3) the “Liquid Sunshine” project has a total investment of 4.474 billion yuan, with a new 625MW wind power generation, 21,000 tons/year of hydrogen production from electrolyzed water, and 100,000 tons/year of CO2 hydrogenation Methanol (containing 150,000 tons/year CO2 capture Collection and refining) and supporting public and auxiliary facilities have been approved and investment decisions have been completed.
Profit forecast and investment rating: We expect the company's 2024-2026 revenue to be 1945/1988/2013 billion yuan, +1% year-on-year, and net profit to mother of 203.6/208.6/21.31 billion yuan, respectively, +4%/+2%/+2%; EPS is 1.54/1.57/1.61 yuan, respectively, corresponding to the current stock price PE of 9/8/8 times. Considering the company's high cooperation ratio, it shows stable performance. At the same time, in the future, the company's Dahaize coal mine will increase production, and the Libi Coal Mine and Weizigou coal mine will be put into operation. The coal chemical business will continue to grow and can be expected to grow, maintaining a “buy” rating.
Risk warning: risk of economic demand falling short of expectations; risk of drastic reduction in coal and coal chemical prices; risk of production safety accidents; risk of falling short of expectations in construction and production progress of new mines; risk of policy regulation exceeding expectations, etc.