Event: The company publishes its 2024 semi-annual report. 2024H1, the company achieved operating income of 37.316 billion yuan, -0.24%; net profit to mother of 2.935 billion yuan, -18.19%; net profit after deducting non-return of 2.887 billion yuan, -16.04%; in a single quarter, Q4 achieved operating income of 19.953 billion yuan, +8.7% YoY, +14.9% YoY; net profit to mother of 1.346 billion yuan, -8.9% YoY, -15.4% YoY; withheld Net profit for mother was 1.322 billion yuan, -3.1% YoY and -15.5% YoY.

Coal business: Cost optimization hedges volume and price effects. 1) 2024H1, the company achieved commercial coal production of 10.32 million tons, -8.86% year over year; commercial coal sales volume was 8.03 million, -18.17% year over year. The price of a ton of commercial coal was 1,144 yuan/ton, -3.8%; the cost of a ton of coal was 565 yuan/ton, -10.08%; 2) In a single quarter, 2024Q2 achieved commercial coal production of 5.09 million tons, -9.98%, and -2.85% month-on-month; commercial coal sales volume was 4.01 million tons, -14.93% yoy, -0.26% month-on-month; tonne coal cost was 536 yuan, -5.69% month-on-month; Compared to -9.61%.

Coal chemical business: Prices are dragging down performance, and ethanol will enter the harvest period. 1) In terms of coke, 2024H1 achieved production/sales volume of 1.698/1.705 million tons, respectively; the average sales price of a ton of coke was 2127 yuan/ton, -15.76% year over year. Affected by the decline in coke prices, the net profit of the company's subsidiary Linhuan Coking for the first half of 2024 was -0.486 billion yuan. 2024Q2, the company achieved production/sales volume of 0.82/0.84 million tons, -3.86%/+0.3%; -6.2%/-2.5% month-on-month; the price of a ton of coke was 1,937 yuan, -18.03% year-on-year and -16.19% month-on-month. 2) In terms of methanol, 2024H1 suspended methanol production due to the commissioning and operation of the ethanol project. The company's production/sales volume fell to 0.16/0.12 million tons, -35.24%/-53.09%; the average price of methanol was 2,177 yuan/ton, +0.001% year over year, and +4.99% month on month. 2024Q2 achieved production/sales volume of 0.07/0.04 million tons, -22.25%/-63.53% YoY, -22.76%/-55.23% month-on-month; the average price of methanol was 2,210 yuan/ton, +7.76% YoY and +2.21% month-on-month. 3) 2024H1 ethanol entered commissioning and operation, achieving an output/sales volume of 0.08/0.06 million tons, with an average price of 5,398 yuan/ton.

The project has blossomed a lot, and high dividends highlight the investment value. In terms of coal, construction of the main shaft of the Taohutu mine was completed in the first half of '24, and is aiming to be completed by the end of 2025. The type of coal in the mine is high-quality thermal coal with high calorific value, with a design production capacity of 8 million tons/year. In terms of coal chemicals, the company's ethanol project entered the commissioning and production stage in 2024, with a production capacity of 0.6 million tons/year, making it the largest single-series production plant in the world. In the power sector, the 2×660MW ultra-supercritical generator set project for concentrated energy generation officially started in April. In addition, five non-coal mines, including Linxiang Shenglong and Lexi Xilangling, are also speeding up construction, aiming to be completed and put into operation by the end of 2024. The gradual implementation of projects under construction is expected to provide a strong guarantee for the company's long-term performance and consolidate the long-term dividend foundation. The company's dividend rate increased to 43.27% in 2023. Based on this, the dividend rate corresponding to 24H1 annualized profit (8/29 closing price) was 6.9%, and the high dividend highlights the value of the investment.

Profit forecast: Considering the continuous release of production capacity of the company's mines under construction and future product price changes, we expect the company's total revenue for 2024-2026 to be 75.9/81/86.4 billion yuan, respectively, net profit to mother of 5.9/6.1/6.7 billion yuan, and PE 6.30/ 6.04/5.56 times, respectively, to maintain a “buy” rating.

Risk warning: Project progress falls short of expectations; coal prices fall beyond expectations; falling oil prices are dragging down chemical prices