HYMD(SH:600971) KAIYUAN SECURITIES·2024-10-23 10:00Investment Rating - The report assigns a "Buy" rating for the company, Hengyuan Coal Power [2][5]. Core Views - The company has a strong coal resource and location advantage, with ongoing construction of thermal power units and green energy initiatives, indicating a promising integrated coal-electricity layout. The high dividend yield enhances its investment value [5]. - The projected net profit for 2024-2026 is estimated at 1.6 billion, 1.7 billion, and 1.73 billion yuan respectively, with corresponding EPS of 1.33, 1.41, and 1.44 yuan per share, suggesting a low PE ratio compared to peers [5][6]. - The company is expected to benefit from stable coal sales, low production costs, and a significant increase in power generation capacity by 2025, which will likely improve profitability [5][19]. Summary by Sections Company Overview - Hengyuan Coal Power is primarily engaged in coal mining, washing, and sales, with a business structure that includes coal as the main focus and electricity as a supplementary sector. The company is controlled by the Anhui State-owned Assets Supervision and Administration Commission [11][12]. Coal Business - The company operates five coal mines with a total approved production capacity of 10.95 million tons per year. The coal products are characterized by low sulfur, low phosphorus, and high calorific value, making them suitable for various industries [19][20]. - The company has a high proportion of long-term coal sales contracts (90%), ensuring stable profitability in its coal business [5][19]. Power Business - As of the end of 2023, the company's thermal power generation capacity is 1,466 MW, with significant projects underway that are expected to increase capacity by 89% by the end of 2025 [5][19]. - The company is also expanding into renewable energy, aligning with national carbon reduction strategies [11][12]. Financial Performance - The company has shown a steady increase in cash flow, with net cash flow from operating activities reaching 3.58 billion yuan in 2023, a year-on-year increase of 19.6% [18][19]. - The dividend payout ratio was 50.1% in 2023, indicating a strong potential for future dividend increases as profitability improves [5][19]. Profitability Metrics - The company's revenue for 2023 was 7.79 billion yuan, a decrease of 7.2% year-on-year, while net profit was 2.04 billion yuan, down 19% year-on-year. However, the gross profit margin remained relatively high at 47% [6][19].