Haohua Energy(SH:601101) Soochow Securities·2024-02-19 16:00Investment Rating - The report assigns a "Buy" rating for the company, marking the first coverage of the stock [1]. Core Views - The company is backed by the Beijing State-owned Assets Supervision and Administration Commission and continues to focus on its coal business [4]. - The coal business is experiencing capacity expansion and price increases, leading to steady growth [4]. - The company has a strong cash flow and low debt levels, enhancing its dividend expectations due to state-owned enterprise reforms [4]. - The company is undervalued with a low price-to-book ratio and is expected to benefit from market re-evaluation [7]. Summary by Sections Company Overview - Beijing Haohua Energy Co., Ltd. was established in 2002 and listed in 2010, primarily engaged in coal production and sales, methanol production, and railway transportation [19]. Financial Metrics - As of Q3 2023, the company has a net asset per share of 7.82 yuan, a debt-to-asset ratio of 52.26%, and a total share capital of 1,440 million shares [2]. Coal Business - The company has significantly increased its coal production capacity, with a total approved capacity of 19.3 million tons and an equity capacity of 13.28 million tons as of the end of 2023 [7][48]. - The company has a cost advantage in coal production, with a gross profit of 261.6 yuan per ton, and is expected to further reduce costs as new mines reach full production [7][85]. - The company’s coal sales are primarily long-term contracts, which stabilize revenue [7]. Cash Flow and Debt Management - As of September 2023, the company had total interest-bearing liabilities of 8.48 billion yuan, with only 880 million yuan due in the short term, indicating low short-term repayment pressure [7]. - The company has a strong cash flow, with a net operating cash flow of 3.061 billion yuan in the first three quarters of 2023 [7]. Dividend Expectations - The company is expected to increase its dividend payout significantly due to state-owned enterprise reforms emphasizing market performance and shareholder returns [7]. - The report predicts a dividend payout ratio increase to 60%, with cash dividends projected at 6.77 billion yuan for 2023 [7]. Profit Forecast and Valuation - The company is projected to achieve net profits of 1.354 billion yuan, 1.511 billion yuan, and 1.545 billion yuan for 2023, 2024, and 2025, respectively, with corresponding P/E ratios of 7.71, 6.91, and 6.76 [31]. - The report highlights a significant discount compared to comparable companies, suggesting potential for price appreciation [7].