Incident: 1) On June 25, 2024, Yongtai Energy issued the “Proposal on a Plan to Repurchase Company Shares through Centralized Bidding Transactions”. The “Bill” proposes to use own funds to repurchase company shares for employee stock ownership plans or equity incentives. The total capital for this repurchase was not less than RMB 150 million (inclusive) and not more than RMB 300 million (inclusive). The maximum price of the repurchased shares did not exceed RMB 1.89 per share. 2) On June 26, 2024, Yongtai Energy issued the “2024 Semi-Annual Performance Pre-Increase Notice”. The company expects to achieve net profit of 11.6 to 1.26 billion yuan in 2024H1, an increase of 14.54% to 24.41% over the previous year; net profit without deduction of 11.11 to 1.21 billion yuan, an increase of 10.46% to 20.41% over the previous year.
Share buybacks & incentives show confidence in development, and management increases holdings and is optimistic about long-term development. According to the announcement, the company plans to use its own funds to repurchase the company's shares through centralized bidding. Based on the maximum price of this repurchase, the number of shares to be repurchased is about 79.37 million to 159 million shares. The repurchase will be used to implement equity incentives or employee stock ownership plans to further improve the company's long-term incentive mechanism. In terms of increasing holdings, on June 11, 2024, the company issued the “Notice Concerning the Sixth Plan for the Company's Core Management to Increase the Company's Stock Holdings”. Based on confidence in the company's development and high recognition of the company's value, the management plans to increase their holdings by 13.75 million shares with its own capital. Through shareholding, repurchase & equity incentives, a long-term incentive mechanism is expected to be established and perfected, attract and retain talents, effectively closely integrate shareholders' interests, company interests and employees' interests, and promote the company's stability, health and sustainable development.
The main coal and electricity industry is steady, moderate and improving, and the Haizetan coal mine contributed to long-term growth. In the first half of 2024, the company's production and operation continued to improve: 1) The company's asset quality is excellent, and the main focus is on high quality production in the Shanxi mining area. Under the premise of production safety, the company made every effort to promote intensive production and maintain a good level of coal business efficiency; 2) Benefiting from measures such as full coverage of Changxie coal contracts, increasing the cash flow rate of Changxie coal, increasing power generation and heating, and improving peak shifting capacity, the power business has become a new profit growth point for the company. The company gave full play to the complementary business advantages of coal and electricity, and its business performance continued to improve. Looking forward to the future, the Haizetan Coal Mine is a key project to fully achieve the goal of integrated coal and electricity, producing high-calorific value chemical coal and thermal coal. The company expects 2026 Q3 to have coal production conditions and be put into operation in 2027, with a long-term production capacity of 10 million tons/year. According to the “Notice on the 2024 Action Plan for Rapid Construction and Continued Significant Improvement in Business Performance”, according to preliminary estimates of average coal prices in the 2023 market, the Haizetan Coal Mine can add about 4.4 billion yuan in net profit after it is put into operation and production capacity is fully released; based on the net profit of the stock business in 2023, the company's net profit reached 6.905 billion yuan.
Lay out the entire vanadium battery industry chain and build a two-wheel drive for energy storage. The company accelerated the deployment of the all-vanadium liquid flow battery energy storage industry, seizing upstream high-quality vanadium resources, possessing 1,58,900 tons of vanadium pentoxide resources, and acquired 70% of the shares of Vnergy, an all-vanadium liquid battery energy storage technology startup at the National University of Singapore in 2023. The company's largest single phase of the 3,000 tons/year high-purity vanadium pentoxide metallurgical preparation production line and the 300MW/year all-vanadium liquid flow battery production line in China are expected to be completed and put into operation in the fourth quarter of 2024, striving to establish the scale of the energy storage industry in 2025, and achieve the goal of more than 30% of the all-vanadium liquid flow battery market share from 2027 to 2030.
Profit forecast and investment rating: We expect the company's total revenue for 2024-2026 to be 317/332/34.8 billion yuan, respectively, net profit to mother of 24.9/27.9/2.95 billion yuan respectively, and 10.34/9.24/8.72 times PE corresponding to the closing price on June 26, respectively, maintaining the company's “buy” rating.
Risk warning: 1) The decline in coal prices exceeded expectations; 2) Domestic economic recovery fell short of expectations; 3) The use of capital investment in infrastructure fixed assets fell short of expectations