DTCIC(601001) 华福证券·2024-12-13 07:45Investment Rating - Buy (First Rating) with a target price of 18.92 RMB [1] Core Views - The company is a low-cost, high-quality thermal coal enterprise with long mineable years and cost advantages [4] - The company has strong financials with ample cash on hand, optimized debt structure, and declining financial expense ratio [4] - Significant potential for asset injection from its parent company, Jineng Group, which is the second-largest coal enterprise in China [4] - The company's valuation is relatively low compared to peers, making it an attractive investment [106] Company Overview - The company, formerly known as Datong Coal, was renamed Jinkong Coal in December 2020 and is primarily engaged in coal production and sales [15] - It is backed by Jineng Group, the largest coal enterprise in Shanxi and the second-largest in China, with abundant coal resources [16] - The company's coal quality is excellent, with low ash, low sulfur, and high calorific value, making it suitable for power generation, cement, and building materials industries [15] - The company benefits from a strategic location near major railway lines and ports, facilitating coal transportation [15] Operational Highlights - The company's coal business accounts for over 95% of total revenue and 98% of gross profit, with non-coal businesses (e.g., activated carbon) contributing minimally [20] - The company's main mines, Tashan and Selian, have mineable years of 59 and 46 years, respectively, ensuring long-term resource stability [21] - Tashan Mine, with an annual capacity of 26.5 million tons, is the company's primary profit contributor, accounting for 76.4% of total coal production and 75.9% of sales in 2023 [25] - The company's coal cost per ton is among the lowest in the industry, driven by the scale and efficiency of Tashan Mine [22] Financial Performance - The company's revenue in 2023 was 15.34 billion RMB, a decrease of 4.6% YoY, mainly due to a 13.7% decline in coal prices [32] - Net profit in 2023 was 3.30 billion RMB, an increase of 8.4% YoY, driven by cost control and declining financial expenses [57] - The company's debt structure has improved significantly, with short-term debt decreasing by 100% YoY in Q3 2024 and financial expense ratio declining to 0.4% [63] - The company's dividend payout ratio has been increasing, reaching 40.1% in 2023, with further room for growth as asset quality improves [76] Asset Injection Potential - The company's parent group, Jineng Group, has a total coal production capacity of 450 million tons per year, while the company's capacity is only 34.5 million tons, representing a low asset securitization rate of 7.7% [4] - Jineng Group has committed to injecting high-quality coal assets into the company, with a focus on assets that meet profitability and compliance standards [97] - The company has sufficient cash flow and a declining debt-to-asset ratio, positioning it well to acquire additional high-quality assets [97] Valuation and Investment Recommendation - The company's 2024-2026 revenue growth is projected to be -1.5%, +2.7%, and +2.7%, respectively, with net profit growth of -12.0%, +9.0%, and +6.9% [100] - The company's PE ratio is lower than its peers, with a 2025E PE of 7.6x, compared to the industry average of 10.0x [106] - Based on a 10x PE valuation for 2025, the target price is set at 18.92 RMB, with a "Buy" rating [106]