Huachuang Securities·2024-04-30 14:32Investment Rating - Strong Buy (Maintained) with a target price of 46.8 RMB, current price at 39.00 RMB [1] Core Views - The company demonstrated resilience in coal production and sales despite a challenging environment, driven by high long-term contract coverage [1] - Coal production and sales increased by 1.5% and 8.8% YoY respectively in Q1 2024, while power generation and sales both grew by 7.0% YoY [2] - The company's diversified business model, including coal, power, transportation, and coal chemical sectors, contributed to stable performance [2] - Long-term contract sales ratio slightly declined to 81.3% in Q1 2024, down 5.3 ppts YoY, mainly due to reduced coverage of downstream power plant demand [2] - The company's high dividend payout ratio, averaging over 75% in recent years, and a current dividend yield of 5.9% enhance its investment appeal [2] Financial Performance - Q1 2024 revenue reached 87.647 billion RMB, up 0.7% YoY but down 3.3% QoQ [2] - Net profit attributable to shareholders was 15.884 billion RMB, down 14.7% YoY but up 39.0% QoQ [2] - Non-GAAP net profit stood at 16.46 billion RMB, down 11.2% YoY but up 9.3% QoQ [2] - Gross margins for coal, power, railway, port, shipping, and coal chemical sectors were 28.9%, 16.9%, 38.1%, 48.6%, 11.2%, and 6.3% respectively in Q1 2024 [2] Business Segments - Coal segment: Production and sales volumes were 81.3 million tons and 117.1 million tons respectively in Q1 2024 [2] - Power segment: Electricity generation and sales reached 55.35 billion kWh and 52.16 billion kWh respectively in Q1 2024 [2] - Transportation segment: Railway transportation volume increased by 10.1% YoY to 82 billion ton-kilometers in Q1 2024 [2] - Coal chemical segment: Polyethylene and polypropylene sales volumes were 89,500 tons and 82,700 tons respectively, down 1.8% and 3.9% YoY [2] Growth and Expansion - The company is actively expanding its coal production capacity through acquisitions, with two ongoing projects expected to add 20.7 million tons/year of production capacity and 1.33 billion tons of remaining recoverable reserves [2] - In the power sector, the company added 167 MW of new generating capacity in Q1 2024, representing 0.3% of its total installed capacity [2] Market Outlook - Thermal coal prices rebounded in mid-April 2024, with two consecutive increases totaling 15 RMB/ton, stabilizing at 840 RMB/ton [2] - The report anticipates potential price increases in Q3 2024, driven by seasonal demand from the coal chemical sector during the "Golden September and Silver October" period [2] Valuation and Forecast - The report adjusts the company's net profit forecast for 2024-2026 to 62.076 billion RMB, 64.001 billion RMB, and 64.813 billion RMB respectively [2] - The target price of 46.8 RMB is based on a 15x PE multiple for 2024, reflecting the company's historical valuation and dividend yield levels [2]