Ping An Securities·2025-10-24 06:47Investment Rating - The report gives a "Recommended" rating for China Shenhua (601088.SH) with a target price of 42.22 CNY as of October 23 [1]. Core Views - China Shenhua is positioned as a leading player in the coal industry, demonstrating strong performance resilience and high dividend payouts. The company has maintained a cash dividend rate above 70% in recent years, with a trend of gradual increases, ensuring substantial cash dividends for shareholders [8][18]. - The company is expanding its resource base through acquisitions, which is expected to initiate a new growth cycle. The acquisition of assets from the State Energy Group will enhance its vertical integration across coal, electricity, and chemical sectors, solidifying its position as a comprehensive energy leader [8][9][38]. Summary by Sections Company Overview - China Shenhua, established in 2004 and listed in 2007, has built a leading position in the coal industry through strategic acquisitions. The company is controlled by the State-owned Assets Supervision and Administration Commission (SASAC) and is part of the National Energy Group, which ranks first in coal production in China [8][14]. - The company has a total share capital of 19,869 million shares, with a market capitalization of 823.2 billion CNY and a debt-to-asset ratio of 31.12% [1]. Core Advantages - The company maintains a leading production scale, with a projected output of 327.1 million tons in 2024, accounting for 25% of the total output among 30 listed coal companies [8][38]. - China Shenhua's integrated business model includes coal production, transportation, power generation, and coal chemical processing, which creates a closed-loop industrial chain [9][38]. - The company has a robust financial structure, with cash reserves exceeding interest-bearing liabilities, indicating a strong liquidity position [20][21]. Industry Perspective - The coal market is currently experiencing supply constraints, with demand expected to recover. The report indicates that the fundamentals of the thermal coal market are improving, driven by seasonal demand and regulatory measures limiting supply growth [9][38]. - The company’s long-term contracts account for a significant portion of its sales, providing stability in pricing and revenue even amid fluctuating market conditions [29][30]. Earnings Forecast and Investment Suggestions - The report forecasts revenues of 313.5 billion CNY, 323.5 billion CNY, and 333.3 billion CNY for 2025, 2026, and 2027, respectively, with corresponding net profits of 51.4 billion CNY, 52.5 billion CNY, and 53.9 billion CNY [6][9]. - The company is expected to maintain a price-to-earnings ratio (P/E) of 16.3, 16.0, and 15.6 for the respective years, reflecting its strong market position and profitability [6][9].