Changjiang Securities·2024-09-05 06:10Investment Rating - The report maintains a "Buy" rating for the company [7][8]. Core Views - The company benefits from increased production and sales, along with improved profitability in coal chemical operations, leading to slightly better-than-expected performance in Q2 2024. The company's ability to maintain profitability stability amid coal price fluctuations is supported by increased volume elasticity and a high proportion of long-term contracts. The anticipated mid-year dividend and potential special dividends enhance the overall dividend expectations for the year, making the H-shares' dividend yield attractive. The company is expected to undergo valuation recovery. In the medium term, the Libi Coal Mine (4 million tons/year) and Weizigou Coal Mine (2.4 million tons/year) are scheduled to begin trial production in 2025, establishing a sustainable development model through simultaneous development of coal, electricity, coal chemicals, and new energy [5][6][7]. Summary by Sections Financial Performance - In H1 2024, the company achieved a net profit attributable to shareholders of 9.79 billion yuan, a decrease of 2.05 billion yuan (-17.3%) year-on-year. In Q2 2024, the net profit was 4.82 billion yuan, an increase of 0.14 billion yuan (+3%) year-on-year, but a decrease of 0.15 billion yuan (-3%) quarter-on-quarter. The company announced a mid-year dividend of 2.94 billion yuan, distributing 0.221 yuan per share (including tax) based on 30% of the net profit for H1 2024 [5][6]. Coal Production and Sales - The company experienced significant increases in production and sales due to the operational advantages of the Dahai and Dong open-pit coal mines. In H1 2024, the company produced 66.5 million tons of marketable coal, a decrease of 0.62 million tons (-0.9%) year-on-year. In Q2 alone, the production was 33.77 million tons, a slight decrease of 0.05 million tons (-0.1%) year-on-year but an increase of 1.04 million tons (+3.2%) quarter-on-quarter. The sales volume for H1 2024 was 133.55 million tons, down by 1.31 million tons (-8.9%) year-on-year, primarily due to a decrease in traded coal sales. The self-produced marketable coal sales were 66.19 million tons, an increase of 0.134 million tons (+2.1%) year-on-year [6][7]. Pricing and Costs - The coal prices in Q2 followed a general market decline. The average selling price of self-produced coal in H1 2024 was 584 yuan/ton, down by 40 yuan/ton (-6.4%) year-on-year. The cost of self-produced coal sales in H1 2024 was 295 yuan/ton, an increase of 8 yuan/ton (+2.7%) year-on-year. The gross profit per ton of self-produced coal was 291 yuan/ton, a decrease of 48 yuan/ton (-14.1%) year-on-year [6][7]. Coal Chemical Business - The coal chemical segment saw improved profitability due to the decline in coal prices, with a gross profit of 2.212 billion yuan in H1 2024, an increase of 339 million yuan (+18.1%) year-on-year, and a gross margin of 20.4%, up by 3.7 percentage points year-on-year [7]. Future Outlook - The company is expected to achieve net profits of 18.6 billion yuan, 18.9 billion yuan, and 19.3 billion yuan for the years 2024, 2025, and 2026, respectively. Based on the closing price on August 30, the corresponding A-share PE ratios are projected to be 9.5x, 9.3x, and 9.1x. The dividend yield is estimated to be around 4.0% for 2024 and 2025, and 4.1% for 2026, based on the announced dividends [7][8].