XINJI ENERGY(SH:601918) KAIYUAN SECURITIES·2024-04-22 10:00Investment Rating - The report indicates a positive investment rating for the company, highlighting its stable performance and growth potential in the coal and power sectors [15]. Core Insights - The company has shown significant improvement in revenue and profitability, with a stable gross margin of around 40% and a notable increase in net profit margin from 0.3% to 16.4% from 2017 to 2023 [5][27]. - The coal business remains a strong revenue driver, benefiting from high long-term contract ratios and stable pricing mechanisms, while the power business is expected to expand significantly with new plants coming online [31][57]. - The company is well-positioned in the market due to its strategic location in Anhui province, which has a high demand for energy, and its ability to maintain competitive pricing through long-term contracts [36][41]. Summary by Sections Company Overview - The company is a state-owned enterprise controlled by the State-owned Assets Supervision and Administration Commission, with a focus on coal and power integration [15]. - It has a total coal production capacity of 23.5 million tons per year, with significant reserves that ensure long-term sustainability [31][32]. Coal Business - The coal business has seen a stable revenue of around 8 billion yuan, with a gross profit of approximately 4 billion yuan, supported by a high proportion of long-term contracts [5][31]. - The company has increased its coal production from 16.55 million tons in 2017 to 21.4 million tons in 2023, with a focus on enhancing washing rates to improve product quality [24][31]. Power Business - The company operates two power plants and has several more under construction, which will significantly increase its total installed capacity to nearly 8,000 MW by 2027 [57][60]. - The average operating hours of the company's power plants are above the national average, contributing to stable electricity sales and profitability [66][70]. - The cost of electricity generation has remained stable at 0.32 yuan per kWh, while the selling price has increased, leading to a record high gross margin of 0.093 yuan per kWh in 2023 [71][72]. Financial Performance - The company has demonstrated a consistent decline in debt-to-asset ratio, indicating improved financial health and stability [5][27]. - Operating cash flow has remained positive, supporting ongoing investments in coal and power integration [30][57].