SLSVC(SH:600123) Minsheng Securities·2024-09-01 07:30Investment Rating - The report upgrades the investment rating to "Recommended" based on the recovery in coal production and sales, as well as the improvement in urea profit margins [2][5]. Core Views - The company reported a revenue of 5.477 billion yuan in the first half of 2024, a year-on-year decrease of 15.33%, and a net profit attributable to shareholders of 552 million yuan, down 59.50% year-on-year [2]. - In Q2 2024, the company achieved a revenue of 3.215 billion yuan, a year-on-year decline of 6.86% but a quarter-on-quarter increase of 42.12%. The net profit for Q2 was 417 million yuan, down 29.20% year-on-year but up 208.89% quarter-on-quarter [2][3]. - The decline in coal prices and rising costs have negatively impacted profitability, although there was a quarter-on-quarter improvement in Q2 2024 [3]. - The company’s coal production and sales in H1 2024 were 7.0561 million tons and 5.7585 million tons, respectively, with a year-on-year increase of 9.34% and 1.66%. The average selling price of coal was 636.99 yuan per ton, down 19.24% year-on-year [3]. - Urea prices decreased, but a significant drop in costs led to a year-on-year increase in profit margins for urea [3]. Financial Summary - The forecast for net profit attributable to shareholders for 2024-2026 is 1.408 billion, 2.054 billion, and 2.371 billion yuan, respectively, with corresponding EPS of 0.95, 1.38, and 1.60 yuan per share [2][4]. - The PE ratios for 2024, 2025, and 2026 are projected to be 8, 6, and 5 times, respectively, based on the closing price on August 30, 2024 [2][4]. - The company’s revenue is expected to decline by 12.94% in 2024, followed by a recovery in subsequent years with growth rates of 12.91% and 5.82% in 2025 and 2026, respectively [4][6].