hbky(600985)2024-09-29 08:38Investment Rating - The report assigns a "Buy" rating for the company, indicating a positive outlook for investment opportunities [7][9]. Core Views - The company is positioned as a high-quality coking coal producer in East China, with significant growth potential due to its resource advantages and strategic location [6][18]. - The company has a robust coal resource base of 4.522 billion tons, with an exploitable reserve of 2.046 billion tons, and a focus on coking coal which constitutes over 70% of its total reserves [6][21]. - The company benefits from a favorable supply-demand imbalance in the East China region, where coking coal resources are scarce, leading to higher pricing stability and margins compared to industry averages [6][34]. Summary by Sections 1. Company Overview - The company has undergone significant restructuring, transitioning from an industrial explosives manufacturer to a coal mining and processing entity, enhancing its profitability [18][19]. - The company is controlled by the Anhui Provincial Government, ensuring a stable ownership structure conducive to long-term growth [19][20]. 2. Resource and Production Capacity - As of mid-2024, the company operates 17 coal mines with a certified production capacity of 35.85 million tons per year and an equity capacity of 33.47 million tons per year [21][34]. - The company has a diverse range of coal products, including coking coal and thermal coal, with a focus on high-quality coking coal that meets stringent market demands [21][22]. 3. Market Position and Competitive Advantage - The company enjoys a competitive edge due to its proximity to major consumption areas in the Yangtze River Delta, facilitating lower transportation costs and stable pricing [28][29]. - The company has established long-term contracts with key customers, resulting in a high customer retention rate and stable revenue streams [34]. 4. Financial Performance and Projections - The company’s revenue is projected to reach 72.063 billion yuan in 2024, with a slight decline expected due to market conditions, but a recovery is anticipated in subsequent years [8]. - The earnings per share (EPS) for 2024 is estimated at 1.95 yuan, with a corresponding price-to-earnings (PE) ratio of 8.4 times, indicating a favorable valuation compared to peers [7][9]. 5. Future Growth Drivers - New projects, including the completion of the Tao Hutou coal mine and a 2*66 MW power plant, are expected to contribute significantly to revenue and profit growth by 2025 [6][7]. - The company’s ethanol project has commenced production and is anticipated to gradually enhance profitability [6][7]. 6. Dividend Policy - The company has consistently increased its dividend payouts, with a projected dividend amount of 2.693 billion yuan for 2024, translating to a high dividend yield of 6.06% based on current share prices [6][7].