CHINA COAL ENERGY(601898) HTSC·2024-10-24 08:08Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 12.00 for the Hong Kong stock and RMB 16.90 for the A-share [5][6]. Core Views - The company's net profit for the third quarter was RMB 4.83 billion, a year-on-year decrease of 0.6% and a quarter-on-quarter increase of 0.1%, indicating stable earnings [1]. - The decline in the proportion of self-produced coal sales negatively impacted the profit margins, alongside a decrease in the chemical segment's production and sales due to maintenance [2][3]. - The company is expected to maintain stable profitability due to a high proportion of long-term coal sales contracts, especially as the traditional peak season for coal approaches in the fourth quarter [1][4]. Summary by Sections Coal Production - The average selling price of self-produced coal in the third quarter was RMB 546 per ton, down 3.2% year-on-year and 4.3% quarter-on-quarter [2]. - The unit cost of self-produced coal decreased to RMB 274 per ton, a reduction of 12.2% year-on-year and 6.9% quarter-on-quarter, partially offsetting the impact of falling prices on profit margins [2]. - The total coal production reached 35.81 million tons, a year-on-year increase of 5.2% and a quarter-on-quarter increase of 6% [2]. Chemical Production - The chemical segment experienced significant production declines due to equipment maintenance, with urea production down 46.3% year-on-year and methanol production down 30% [3]. - The unit cost for urea increased by 27.4% year-on-year, while methanol's unit cost rose by 22.7% year-on-year, leading to a sharp decline in the segment's profit margins [3]. Profit Forecast and Valuation - The forecasted net profit for 2024-2026 is RMB 20.19 billion, RMB 21.92 billion, and RMB 23.45 billion respectively [4][7]. - The average PE ratio for comparable companies in the industry for 2025 is 9.7x, while the company is assigned a PE of 10.7x for 2024-2025, leading to a target price of RMB 16.90 for A-shares and HKD 12.00 for H-shares [4][8].