Yankuang energy (600188)
Event and summary: on December 15, the company announced the development strategy outline and made a long-term plan for the future transformation and development direction: on the basis of focusing on the main business and becoming stronger and bigger, the company plans to transform and develop into five industries: mining, high-end chemical new materials, new energy, high-end equipment manufacturing and intelligent logistics, and transform from a single coal and chemical enterprise to a comprehensive energy mining service provider. Combined with the national “double carbon” strategy, we believe that the development strategy of Yankuang energy is highly in line with the central carbon peak and carbon neutralization spirit, especially reflecting the recent central economic work conference: Based on the basic national conditions dominated by coal, pay attention to the clean and efficient utilization of coal, increase the consumption capacity of new energy, and promote the optimal combination of coal and new energy. Considering the industrial resources and business foundation of the company and the major shareholder Shandong energy group, Yankuang energy’s development strategy is forward-looking, scientific and operable. Its transformation and development to a growing comprehensive energy miner is worth looking forward to!
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Mining industry: strive to achieve a coal output scale of 300 million tons / year in 5-10 years, expand the mineral fields such as molybdenum, gold, copper, iron and potassium, and realize the transformation from single coal mining to multi mineral development. In 2021, we expect the company’s commercial coal output to be about 105 million tons (the output was annualized in the previous November), Shandong energy group, the controlling shareholder of the company, achieved a coal output of 270 million tons in 2020. The company plans to double the annual output scale to 300 million tons / year in 5-10 years through group asset injection, timely M & A and endogenous development. In 2011, the former Yankuang Group acquired Canada’s high-quality potassium ore resource with a reserve of 8.576 billion tons, which is currently under development; in 2017, it cooperated with Venezuela Signed a joint venture to fully develop gold minerals in three blocks in Venezuela; In addition, the Inner Mongolia mining industry controlled by the company in 2020 has gold, molybdenum and other mineral resources. With the development and M & A of relevant resources, the company can realize the transformation from single coal mining to multi mineral development.
In terms of chemical business, the company plans to extend the existing chemical industry chain in accordance with the development direction of high-end green and low-carbon, and strive to produce more than 20 million tons of chemicals in 5-10 years, of which new chemical materials and high-end chemicals account for more than 70%. *** On November 17, the national standing committee decided to set up a 200 billion re loan to support the clean and efficient utilization of coal. The central economic work conference in December listed the clean and efficient utilization of coal as an important position as the development of new energy. The development of modern coal chemical industry is an important way of clean and efficient utilization of coal and a promising industrial direction in the future. In the past ten years, through the construction of established projects and a series of asset mergers and acquisitions, the company has built a coal chemical industry cluster development system and has multiple complete industrial chains of coal gasification and coal liquefaction, In 2020, the company’s chemical product output will be 4.58 million tons (including 1.82 million tons of methanol, 1.07 million tons of acetic acid and 410000 tons of crude liquid wax). If the planning goal is achieved, the company’s chemical output will be increased by three times, and the products are expected to be more high-end and have higher added value.
The company first proposed the layout of new energy industry: promote the development and construction of new energy industry projects such as wind power, photovoltaic and supporting energy storage, and strive to achieve an installed capacity of more than 10 million kw of new energy power generation and a hydrogen supply capacity of more than 100000 tons / year in 5-10 years. Shandong energy group, the controlling shareholder of the company, as the provincial new energy investment platform determined by Shandong provincial government, leads the development of offshore wind power in Bozhong region; In addition, Shandong energy group also plays an important role in the planning of 57gw photovoltaic installed capacity in the 14th five year plan of Shandong Province. The company first proposed the layout of new energy industry. Considering avoiding horizontal competition, the company should be the only listing platform for new energy industries such as wind power, photovoltaic and supporting energy storage for controlling shareholders. Relying on the positioning and position advantages of Shandong energy group in the province, the company has a broad space for new energy industry. In terms of hydrogen energy, Shandong energy group is the main initiator of Shandong hydrogen energy and fuel cell industry alliance. At the same time, it has also deeply participated in the medium and long term development plan of Shandong hydrogen energy industry and led to host China hydrogen production and hydrogen energy industry conference for four consecutive sessions. As a major chemical industry province, Shandong is rich in hydrogen resources. According to the statistics of the national energy administration, about 962000 tons of hydrogen can be recovered from the exhaust gas of coal chemical industry and other industrial tail gases every year. The strategic outline proposes to rely on the advantages of the existing coal chemical industry to orderly develop downstream hydrogen production and other industries, which is worth looking forward to.
High end equipment manufacturing industry and intelligent logistics industry: Based on the existing equipment manufacturing industry, focus on the development of traditional advantageous products such as high-end coal machinery manufacturing, expand the manufacturing of new energy equipment such as fans, and cultivate medium and high-end series products. Coordinate products, users and third-party service providers to build an intelligent logistics system. It is worth noting that on December 14, Shandong energy group and Jingdong Group signed a strategic cooperation agreement, and the two sides will carry out comprehensive cooperation in fields such as smart logistics.
The company’s strategic planning is a model for the optimal combination of coal and new energy. The central economic work conference in December pointed out that “based on the basic national conditions dominated by coal, we should pay attention to the clean and efficient utilization of coal, increase the consumption capacity of new energy, and promote the optimal combination of coal and new energy”. The company’s strategic planning is fully in line with the central guiding ideology: while expanding and strengthening the main coal industry, vigorously develop modern coal chemical industry and new energy, and actively and steadily promote the energy transformation under the “double carbon goal”.
Profit forecast and investment rating: we estimate that the net profit attributable to the parent company from 2021 to 2023 will be 17.561 billion yuan, 28.253 billion yuan and 32.936 billion yuan respectively, the annualized growth rate of the three-year performance will be about 63%, and the EPS will be 3.59, 5.78 and 6.74 yuan respectively, The corresponding PE is 7, 4 and 4 times respectively (the closing price on December 15, 2021 is 24.42 yuan), and the dividend yield is about 7.4%, 11.8% and 13.9%. We think Yanzhou Coal Mining Company Limited(600188) is seriously underestimated. We are optimistic about the growth space of the company’s strategic transformation and development, endogenous extension and the implementation of cost reduction and efficiency enhancement, maintain the target price of 42.44 yuan / share (corresponding to 7 times PE in 2022) and keep the “buy” rating of the company unchanged.
Stock price catalyst: implementation of development strategy projects; The prices of coal, crude oil, acetic acid, methanol and other products continue to rise or remain high.
Risk factors: the risk of policy exceeding expectations to regulate coal prices; “Epidemic situation” repeatedly suppresses the driving force of economic recovery outside China; The capacity release of projects in production or under construction is less than expected; Safety production accident risk; Strict safety supervision restricts coal mine production.
