Incident: On August 30, 2024, the company released its 2024 semi-annual report. The company achieved operating income of 72.312 billion yuan in the first half of 2024, or -24.07% year-on-year; net profit attributable to shareholders of listed companies was 7.568 billion yuan, or -31.64% year-on-year.

24Q2 performance increased slightly month-on-month. 24Q2 achieved net profit of 3.812 billion yuan to mother, -16.4% year-on-year and +1.5% month-on-month. 24Q2 financial expenses were 1.097 billion yuan, +78.8% yoy, +35.9% month-on-month, R&D expenses 0.738 billion yuan, +104.6% yoy, +346.8% month-on-month.

24H1 coal production and sales increased, and sales prices declined. 24H1 achieved coal production of 69.078 million tons, +8.2% year-on-year, and 67.875 million tons of coal sales, +2.9% year-on-year, of which 63.758 million tons of self-produced coal were sold, an increase of 9.0% year on year. The comprehensive sales price of coal was 697.6 yuan/ton, -23.5% compared with the same period, of which self-produced coal sold at 667.6 yuan/ton, or -22.1% compared to the same period last year. The cost of a ton of coal was 406 yuan/ton, -14.3% year-on-year, and the cost of self-produced coal was 359.6 yuan/ton, -1.4% year-on-year. The gross margin of the coal business was 41.8%, -6.3 percentage points year over year.

In 24Q2, self-produced coal sales increased month-on-month, and gross profit increased slightly month-on-month. 24Q2 achieved coal production of 34.443 million tons, +1.8% year over month, -0.6% month on month, and completed coal sales of 33.691 million tons, -0.98% year over year, and -1.4% month on month, of which 32.627 million tons of self-produced coal were sold. YoY +5.6%, month-on-month +4.8%. The comprehensive sales price was 667.7 yuan/ton, -17% year over month, -8.2% month on month, of which self-produced coal sold at 659.8 yuan/ton, -14% year on year and -2.3% month on month. The cost of a ton of coal was 365.9 yuan/ton, -9.5% year-on-month, -17.9% month-on-month, and the cost of self-produced coal was 351.3 yuan/ton, -4.2% year-on-year and -4.6% month-on-month. The gross profit of the coal business was 10.17 billion yuan, -25.4% year-on-year and +5.6% month-on-month.

Non-coal business gross profit increased. In terms of chemical business, 24Q2 completed sales of 1,866 million tons of chemicals, +1.7% year over year and -0.8% month over month. The chemical business achieved gross profit of 1.316 billion yuan, +24.9% year-on-year and +25.5% month-on-month. In terms of power business, 24Q2 completed a power generation capacity of 1.949 billion kilowatt-hours, -7.3% year-on-year and -0.8% month-on-month. The electricity business achieved gross profit of 0.031 billion yuan, -11.4% year-on-year and -69% month-on-month. The 24Q2 non-coal business achieved a total gross profit of 1.347 billion yuan, +23.7% year over year and +17.2% month over month.

The proposed dividend is 30.51%, with a dividend ratio of 1.6%. The company plans to distribute a cash dividend of 0.23 yuan/share to all shareholders, with a total cash dividend of 2.309 billion yuan, accounting for 30.51% of the net profit due to mother. The A/H share dividend ratio is 1.6%/2.5% based on the A/H share price on August 30, 2024. The company's annual guaranteed cash dividend ratio is 60%, so the dividend rate for A/H shares in 2024 is 6.1%/9.4%, respectively.

Investment advice: We expect the company's net profit to be 14.519/16.003/16.839 billion yuan in 2024-2026, corresponding EPS of 1.45/1.59/1.68 yuan/share, respectively, and the PE corresponding to the stock price on August 30, 2024 is 10/9/8 times. Maintain a “Recommended” rating.

Risk warning: Macroeconomic growth has slowed; coal prices have dropped sharply, chemical prices have declined sharply, there is a risk of exchange rate fluctuations, and uncertainty about corporate asset injections.