\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 088 China Shenhua Energy Company Limited(601088) )
The company released the annual report of 2021, and the main financial data are as follows:
In 2021, the company achieved an operating revenue of 335216 billion yuan, an increase of 43.7% year-on-year, and the net profit attributable to shareholders of listed companies was 50.269 billion yuan, an increase of 28.3% year-on-year. After deduction, the net profit attributable to shareholders of listed companies was 50.036 billion yuan, an increase of 31.1% year-on-year. The net cash flow from operating activities was 94.575 billion yuan, a year-on-year increase of 16.3%. The basic income per share was 53.4% year-on-year. The weighted average roe was 13.64% (a year-on-year increase of 2.64 PCT).
In the fourth quarter of 2021, the company achieved an operating revenue of 102267 billion yuan, an increase of 14.95% month on month and 52.27% year on year; The net profit attributable to shareholders of listed companies was 9.518 billion yuan, a month on month decrease of 35.36% and a year-on-year increase of 69.72%; The net profit after non deduction was RMB 9.667 billion, a month on month decrease of 34.71% and a year-on-year increase of 55.14%.
Reasons for the decline of Q4 performance of the company: (1) in the fourth quarter, the group incurred more costs and expenses than in the first three quarters; (2) Some coal companies affiliated to the company actively applied for the preferential policies of enterprise income tax for the western development. In the first three quarters, the enterprise income tax was calculated at the preferential tax rate of 15% for the western development. As of the end of the reporting period, these coal companies had not obtained the identification and approval documents from the national development and Reform Commission, but calculated the annual enterprise income tax at the tax rate of 25%. The income tax in Q4 was 7.22 billion yuan in a single quarter, an increase of about 2.8 billion yuan month on month; (3) In the fourth quarter, the group conducted impairment test on assets with signs of impairment. In Q4, the provision for asset and credit impairment loss was 3.89 billion yuan in a single quarter, an increase of about 3.86 billion yuan month on month; (4) In the fourth quarter, the company confirmed that it should account for more losses of associated companies. The investment loss in Q4 was 1.08 billion yuan in a single quarter, with a month on month increase of about 570 million yuan.
The increase in performance in 2021 is mainly due to the rise in volume and price of coal sector and the significant increase in transportation volume of transportation industry sector. Specifically:
Coal sector: both volume and price rise, with rapid performance growth. During the reporting period, the output of commercial coal was 307 million tons, a year-on-year increase of 5.3%, the sales volume of coal was 482 million tons, a year-on-year increase of 8.0%, and the self-produced coal and purchased coal increased by 5.6% and 12.8% respectively. Among them, the annual sales volume of Changxie coal is 208 million tons, the monthly sales volume of Changxie coal is 196 million tons, the spot sales volume is 55 million tons, and the direct sales volume of pithead is 24 million tons, accounting for 43.1%, 40.7%, 11.3% and 4.9% respectively. In 2021, the average sales price was 588 yuan / ton, up 43.4% year-on-year, including 456 yuan / ton (+ 20.0%) in the annual long-term association, 765 yuan / ton (+ 64.5%) in the monthly long-term association, 599 yuan / ton (+ 43.3%) in the spot and 263 yuan / ton (+ 49.4%) in the pit mouth direct sales. In 2021, the average selling cost per ton of coal was 440 yuan / ton, with a year-on-year increase of 39.58%, mainly due to the sharp increase in the cost of purchased coal (year-on-year + 87.15%), while the unit production cost of self-produced coal was 155.5 yuan / ton (+ 20.9%), which was due to the increase in labor costs and the increase in the provision of unused safety production costs. The overall gross profit of the sector was 80.642 billion yuan, a year-on-year increase of 63.1%, accounting for 73% of the total gross profit of the company, and the gross profit margin was 27.6%, a year-on-year increase of 1.6 percentage points. The volume and price of the coal sector have risen simultaneously, and the performance has increased rapidly. This year, the adjustment of the pricing mechanism of the long-term association has been officially implemented. The price center of the long-term association has been raised from 535 yuan / ton to 675 yuan / ton. The long-term association of the company accounts for more than 80%, which is expected to benefit deeply; From the current price, the prices of the long-term association from January to March were 725, 725 and 720 yuan / ton respectively, and the average price in the first quarter (723 yuan / ton) increased by 22.5% year-on-year. This year, the prices of thermal coal in China and abroad have risen sharply. The company’s selling price is expected to remain high, and the performance of the sector will be further improved.
Transportation sector: the traffic volume increased and the performance increased steadily. In terms of railways, in 2021, the self owned railway transportation turnover reached 303.4 billion ton kilometers, a year-on-year increase of 6.2%, the unit price was 134.14 yuan / thousand ton kilometers, a year-on-year decrease of 1.03%, the unit cost was 71.02 yuan / thousand ton kilometers, a year-on-year increase of 2.5%, and the gross profit was 19.153 billion yuan, a year-on-year increase of 1.2%, accounting for 17% of the total gross profit of the company, and the gross profit rate was 47.1%, a year-on-year decrease of 1.8 percentage points. In terms of ports, the amount of water coal in its own ports reached 240 million tons, a year-on-year increase of 0.4%, the unit price was 26.8 yuan / ton, a year-on-year increase of 0.9%, the unit cost was 13.5 yuan / ton, a year-on-year increase of 3.1%, the gross profit was 3.199 billion yuan, a year-on-year decrease of 0.93%, accounting for 3% of the total gross profit of the company, and the gross profit margin was 49.7%, a year-on-year decrease of 1.1 percentage points. Affected by the growth of coal sales, the performance of transportation business has increased to a certain extent, and the sector is relatively stable.
Power sector: the rise in coal prices has lowered the gross profit margin, and new energy power generation has become a new direction. In 2021, there was a strong demand for electricity. The company’s total power generation was 166.45 billion kwh, a year-on-year increase of 22.1%, and the total power sales was 156.13 billion kwh, a year-on-year increase of 22.3%. The unit selling price of electricity was 410.7 yuan / MWh, with a year-on-year increase of 5.9%. Prices in various regions generally rose, of which Guangxi rose the most (18.4%), mainly because Guangxi issued the emergency notice of the Department of industry and information technology of the autonomous region on further adjusting the regional power market trading scheme in 2021 in October 2021, requiring all coal-fired power generation to enter the power market, and raising the floating range of electricity price for high energy consuming industries, As a result, the average selling price of electricity increased year-on-year. The unit cost was 379 yuan / MWh, with a year-on-year increase of 26.99%, and the gross profit margin was 7.7%, with a year-on-year decrease of 15.3 percentage points. The revenue of the sector was 64.124 billion yuan, a year-on-year increase of 29.6%, the operating cost was 59.173 billion yuan, a year-on-year increase of 55.3%, and the gross profit was 4.951 billion yuan, a year-on-year decrease of 56.52%, accounting for 4.47% of the total gross profit of the company. In 2021, the price of thermal coal rose sharply, the cost of raw materials in the power sector rose sharply by 72.9%, and the gross profit fell sharply. In 2021, the company’s coal-fired machine assembly capacity increased by 5620 MW, an increase of 18%. According to the company’s plan, the main capital expenditure in 2022 will shift from coal to electricity. The annual planned capital expenditure is 17.2 billion yuan, including 5 billion yuan for new energy business. The company will further expand the new energy power generation business on the basis of existing thermal power, which will become a new growth point.
Coal chemical industry sector: both volume and price rise, and gross profit rises sharply. In 2021, the total sales volume of polyethylene and polypropylene of the company was 648400 tons, with a year-on-year increase of 5.77%. The unit sales price was 902375 yuan / ton, a year-on-year increase of 20.22%, and the unit sales cost was 714528 yuan / ton, a year-on-year increase of 7.99%. The segment realized a revenue of 5.851 billion yuan, a year-on-year increase of 13.3%, an operating cost of 4.633 billion yuan, a year-on-year increase of 1.8%, a gross profit of 1.218 billion yuan, a year-on-year increase of 99.02%, accounting for 1.1% of the company’s total gross profit and a gross profit margin of 20.8%, a year-on-year increase of 9 percentage points.
Large and high dividends again, a model of value investment. The company plans to distribute cash dividends of RMB 2.54/share, totaling RMB 50.466 billion, accounting for 100.4% of the net profit attributable to the parent company in 2021. Based on the latest closing price (RMB 27.18 for A-Shares and HK $22.3 for H shares), the dividend rate of A-Shares is 9.3% and that of H shares is 14%, which is another big dividend after 58% and 92% high scores in 2019 / 2020.
The coal industry is expected to have high medium and long-term prices and no large capital expenditure. The continuous high return to investors will be a major feature of the industry.
Profit forecast and Valuation: the supply and demand of the industry continues to be tight and the price remains high. The company benefits from the rise in coal prices and the adjustment of the long-term association pricing mechanism, and its performance is expected to rise further. We expect the company to achieve net profits attributable to shareholders of the parent company of 64.54/65.95/67.36 billion yuan from 2022 to 2024 (54.49/56.43 billion yuan from 2022 to 2023), up from + 28%, + 2% and + 2% respectively year-on-year, equivalent to EPS of 3.25, 3.32 and 3.39 yuan / share respectively, At present, the PE corresponding to the share price of 27.18 yuan is 8.4x/8.2x/8.0x respectively, maintaining the “buy” rating of the company.
Price fluctuation of coal and chemical products; Safety production risk; Excessive policy regulation; Renewable energy substitution; Coal import impact risk, etc. (according to the sensitivity calculation of the model, if the comprehensive coal price of the company falls by 50 yuan / ton in 2022, the net profit attributable to the parent company will fall by 147 / 151 / 15.5 billion yuan from 2022 to 2024 respectively).
