lu'an EED(601699) 平安证券·2024-11-18 10:40Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [2]. Core Views - The company is positioned as a leading producer of injection coal in China, with a steady increase in production scale and a strong financial position due to reduced debt and increased cash flow [5][12]. - The company has significant potential for future capacity expansion as it can continue to acquire coal mining projects from its parent group [12]. - The coal market is expected to stabilize with a gradual increase in prices, supported by improving demand forecasts [11][12]. Summary by Sections Company Overview - The company is a major listed coal enterprise under Shanxi Luan Mining Group, focusing on the production of thermal and injection coal [5][25]. - As of the end of 2023, the company operates 23 mines with a total capacity of 48.2 million tons, ranking second in coal production and sales in Shanxi province [5][12]. - The company has seen a compound annual growth rate (CAGR) of 7.82% in raw coal production and 7.63% in sales from 2018 to 2023 [5]. Financial Health - The company has significantly increased its cash reserves and optimized its debt structure, reducing interest-bearing liabilities by nearly 15 billion yuan year-on-year [6][38]. - As of Q3 2024, the company's cash reserves are 14.75 times its interest-bearing debt, with a debt ratio of 47.15% and an interest-bearing debt ratio of 1.69% [6][38]. - The company has raised its cash dividend payout ratio to around 60% in response to higher coal prices and profits, with a projected dividend yield of approximately 4.6% as of November 12, 2024 [7][32]. Market Outlook - The report anticipates a stable recovery in coal prices, particularly for thermal coal, with expected average prices around 890 yuan per ton in Q4 2024 [11]. - Injection coal prices are expected to stabilize as demand from the construction sector improves, although significant price increases are not anticipated due to the lack of substantial demand recovery [11][12]. Profit Forecast and Investment Recommendations - The company is projected to generate revenues of 35.85 billion yuan in 2024, with net profits expected to decline by 55.1% to 3.55 billion yuan [8][12]. - The report suggests that the company's earnings will recover as coal prices stabilize, and it maintains a strong cash flow and low debt levels, supporting its high dividend payout [12].