lu'an EED(601699) Guotai Junan Securities·2024-10-31 07:46Investment Rating - The report maintains a "Buy" rating for the company [6][16]. Core Views - The company's performance slightly underperformed expectations, with a significant recovery in production and sales observed in Q3 2024. However, increased costs and falling coal prices have impacted profits, with expectations for a reduction in year-on-year pressure on earnings in Q4 [2][4]. - The company reported a revenue of 26.649 billion yuan for the first three quarters of 2024, down 19.28% year-on-year, and a net profit attributable to shareholders of 2.798 billion yuan, down 61.51% year-on-year. The third quarter alone saw revenues of 8.995 billion yuan, a year-on-year decrease of 19.19% but a quarter-on-quarter increase of 0% [4][10]. - The report anticipates that the peak pressure on production and sales has passed, with expectations for continued recovery in Q4. The company’s coal production and sales are expected to improve, aided by the easing of restrictions and increased production capacity utilization [4][10]. Financial Summary - Revenue for 2022 was 54.297 billion yuan, with projections of 43.137 billion yuan for 2023, 34.449 billion yuan for 2024, and a gradual increase to 38.884 billion yuan by 2026. The year-on-year changes show a decline of 20.6% in 2023 and 20.1% in 2024, followed by a recovery of 7.5% in 2025 and 5.0% in 2026 [1]. - Net profit attributable to shareholders was 14.175 billion yuan in 2022, projected to drop to 7.922 billion yuan in 2023, and further down to 3.314 billion yuan in 2024, with a recovery to 5.039 billion yuan by 2026 [1]. - Earnings per share (EPS) are forecasted to decrease from 4.74 yuan in 2022 to 2.65 yuan in 2023, with further declines to 1.11 yuan in 2024, before recovering to 1.68 yuan by 2026 [1]. Production and Sales Insights - The company’s coal production for the first three quarters of 2024 was 42.47 million tons, a year-on-year decrease of 4.82%, while sales of commercial coal were 38.10 million tons, down 5.79% year-on-year. In Q3 2024, coal production was 14.80 million tons, a slight year-on-year decrease of 1.8%, but sales increased by 1.8% year-on-year [4][10]. - The average selling price of commercial coal in the first three quarters was 662.15 yuan per ton, down 12% year-on-year, with Q3 prices at 624 yuan per ton, reflecting a 14.3% year-on-year decline [4][10]. Target Price Adjustment - The target price has been adjusted to 18.55 yuan, reflecting an increase from the previous estimate of 17.51 yuan, based on a comparable company’s 2025 PE of 12.31x [4][10].