Panjiang Co., Ltd. released the 2024 semi-annual report on August 27, 2024:

In the first half of 2024, the company achieved operating income of 4.046 billion yuan, a year-on-year decrease of 23.63%; net profit to mother was 0.

3.7 billion yuan, a year-on-year decrease of 93.98%; net profit after deducting non-attributable net profit of 0.046 billion yuan, a year-on-year decrease of 108.16%; net cash flow from operating activities was 0.108 billion yuan, a decrease of 86.43% year on year. Basic earnings per share were 0.02 yuan, a year-on-year decrease of 94.10%; the weighted average ROE was 0.33%, a year-on-year decrease of 4.91 pcts.

2024Q2 achieved operating income of 2.097 billion yuan (-13.88% YoY, +7.57% month-on-month), net profit to mother of 0.016 billion yuan (-94.07% YoY, -25.22% month-on-month), and net profit of -0.048 billion yuan after deducting non-return to mother.

Coal business: Production and sales are expected to continue to recover in the second half of the year, and profit recovery can be expected.

In terms of production and sales volume: Panjiang Co., Ltd.'s commercial coal sales declined sharply year-on-year in the first half of the year due to multiple factors such as increased safety pressure and increased investment in production safety. In the first half of 2024, the company's commercial coal production was 4.47 million tons, a year-on-year decrease of 30.14%; commercial coal sales were 4.07 million tons, a year-on-year decrease of 39.59%. Commercial coal production in Q2 2024 was 2.43 million tons (-24.65% YoY, +19.46% YoY), and commercial coal sales were 2.17 million tons (-33.03% YoY, +14.33% YoY).

In terms of price and profit: In the first half of 2024, the company's coal price was 835 yuan/ton, up 9.32% year on year; the cost of a ton of coal was 644 yuan/ton, up 19.64% year on year; gross profit per ton of coal was 191 yuan/ton, a decrease of 15.27% year on year.

2024Q2 Company's price per ton of coal was 784 yuan/ton (+7.70% YoY, -12.37%); the cost of a ton of coal was 625 yuan/ton (+24.09% YoY, -6.07% month-on-month), and the gross profit per ton of coal was 159 yuan/ton (-29.19% YoY, -30.69% month-on-month).

Looking ahead to the second half of the year, coal production and sales are expected to continue to improve, the cost side is expected to be diluted, and profitability improvements can be expected.

Electricity business: The power project was officially put into operation, and the sector's profit performance was good. Power projects such as Xinguang's coal-fired power generation project and Guanling Renewable Energy Company's first phase of the photovoltaic power generation project were officially put into operation in the first half of the year, driving the rapid expansion of the company's power sector. In the first half of 2024, power generation was 1.486 billion degrees, up 6689.91% year on year; feed-in electricity was 1.408 billion degrees, up 6334.19% year on year. At the same time, the profit performance of the power sector was strong, becoming a new profit growth pole for the company. In the first half of 2024, Xinguang Power Generation Co., Ltd. and Panjiang New Energy Power (Guanling) Co., Ltd. achieved net profit of 0.021 and 0.061 billion yuan respectively.

Profit forecast, valuation and investment rating: Considering safety checks and the impact of falling coal prices, we have revised our 2024-2026 profit forecast. We expect the 2024-2026 revenue to be 8.844, 10.393, and 11.553 billion yuan, respectively, and realized net profit to mother of 0.38, 0.712, and 0.74 billion yuan (the original forecast values for 2024-2026 were 7.52, 8.75, and 9.

3.3 billion yuan), with earnings per share of 0.18, 0.33, and 0.34 yuan. The current stock price is 5.23 yuan. The corresponding PE is 29.6X/15.8X/15.2X, respectively, maintaining a “buy” rating.

Risk warning: There is a risk that coal prices will fall beyond expectations, progress in ongoing and proposed projects will fall short of expectations, risk of macroeconomic decline, and risk of delayed information or untimely updates in public data used in research reports.