\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 088 China Shenhua Energy Company Limited(601088) )
Event: March 25 China Shenhua Energy Company Limited(601088) issued the annual report for 2021. In 2021 China Shenhua Energy Company Limited(601088) year, the operating revenue reached 335216 billion yuan, a year-on-year increase of 43.7%; The total profit was 77.375 billion yuan, a year-on-year increase of 23.5%; The net profit attributable to the parent company was 50.269 billion yuan, a year-on-year increase of 28.3%; The net profit after deducting non recurring profit and loss was 50.036 billion yuan, a year-on-year increase of 31.1%; The cash flow from operating activities (excluding the influence of financial companies) is 94.575 billion yuan. The basic earnings per share was 2.53 yuan / share, a year-on-year increase of 28.4%. The cash dividend to be distributed is 2.54 yuan / share (including tax), with a total cash dividend of about 50.466 billion yuan, accounting for 100.4% of the net profit attributable to shareholders under the Chinese accounting standards for business enterprises.
Comments:
Coal sector: the simultaneous rise of volume and price drives the high increase of performance, and the coal price center is expected to continue to rise. In 2021, the company’s coal output was 307 million tons (YoY + 5.3%), the planned completion rate was 108%, and the coal sales volume was 482 million tons (YoY + 8%), the planned completion rate was 101.3%; Strong demand in the coal market led to rising prices. The average sales price of the company’s coal was 588 yuan / ton, a year-on-year increase of 43.4%. The annual price realized by the long-term association is 456 yuan / ton (YoY + 20%); The monthly price of long-term cooperation is 765 yuan / ton (YoY + 43%). The double increase in coal production and sales and the sharp rise in sales prices led to a rapid increase in revenue. The annual revenue of the coal sector was 292.6 billion yuan, a year-on-year increase of 54%. Affected by the increase of safety cost and labor cost, the unit production cost of self-produced coal was 155.5 yuan / ton, with a year-on-year increase of 20.9%. The increase in the sales volume and unit cost of purchased coal increased the cost of purchased coal by 111% year-on-year to 102.8 billion yuan. The operating cost of the company’s coal sector was 212 billion yuan, a year-on-year increase of 50.8%. The gross profit margin of the sector was 27.6%, with a year-on-year increase of 1.6 PCT, contributing 72.8% to the gross profit of the company. Looking forward to 2022, the rapid development of emerging industries and the rapid improvement of residents’ living standards will drive the growth of power consumption in the whole society. The demand for coal is expected to continue, while the supply side is inelastic or very low elasticity, and the gap between supply and demand is expected to continue to enlarge. The coal price center continues to rise, and the performance of the company’s coal sector is expected to continue to improve.
Power sector: the number of power generation hours has increased, the cost of coal has risen, and the reform of power marketization is accelerated, which is expected to alleviate the contradiction between coal and electricity. In 2021, the company generated 166.45 billion kwh of electricity and sold 156.13 billion kwh of electricity, with a year-on-year increase of 22.1% and 22.3%. The average utilization hours were 4749 hours, a year-on-year increase of 7.9%. The weighted average selling price of electricity was 348 yuan / MWh, an increase of 4.2% year-on-year. Driven by the growth of electricity sold and electricity selling price, the annual revenue of the company’s power sector was 64.124 billion yuan, a year-on-year increase of 29.6%. Due to the rise of coal purchase price and electricity sales and the high cost of raw materials, the operating cost increased by 55.3% over last year to 59.173 billion yuan, and the gross profit margin of the power sector decreased by 15.3 PCT to 7.7%. In 2021, the self-produced coal used by the company for power generation accounted for 83.8% of the total coal consumption. It is expected that in the future, with the continuous increase of coal-fired power generation and the implementation of the policy of floating the market transaction price by 20%, the company’s power sales price is expected to rise and stabilize the cost pressure caused by high coal prices to a certain extent.
Transportation and coal chemical industry: the land, port and shipping sector ensures supply and creates efficiency, releases transport capacity, and continues to give full play to the advantages of integration. During the reporting period, the company fully cooperated with the supply guarantee goal, gave full play to the synergy advantages of the industrial chain and released the transportation capacity to the greatest extent. Its own railway transportation turnover reached 303.4 billion ton kilometers (YoY + 6.2%); The cumulative coal loading volume of Huanghua port and Shenhua Tianjin coal terminal is 261.4 million tons (YoY + 4.9%), both reaching the highest level in history; The shipping turnover was 112.1 billion tons nautical miles (YoY + 20.5%), and the annual sales volume of coal chemical products (polyethylene + polypropylene) was 648.4 thousand tons, a year-on-year decrease of 5.77%. In terms of operating results, the company’s railway, port, shipping and coal chemical industry realized operating revenue of 40.699 billion yuan, 6.44 billion yuan, 6.195 billion yuan and 5.851 billion yuan respectively, with a year-on-year increase of 5.1%, 1.3%, 99.1% and 13.3%. The gross profit margins of railway and port segments were 47.1% and 49.7% respectively, with a year-on-year decrease of 1.8 and 1.1 PCT; the gross profit margins of shipping and coal chemical segments were 19.2%, with a year-on-year increase of 7.5 and 9 PCT.
A higher proportion of dividends than expected, and the attribute of cash cow has been strengthened. In 2021, the company continued to implement the measures of high proportion dividend, and planned to distribute cash dividend of RMB 254 per share (including tax), with a total cash dividend of about RMB 50.466 billion, accounting for 100.4% of the net profit attributable to shareholders under Chinese accounting standards for business enterprises and 97.8% of the profit attributable to owners of the company under international financial reporting standards. According to the closing price on March 25, 2022, the dividend yield of A-Shares is 9.35% and that of H shares is 11.39%. Due to the smooth operation of huangda railway and power plant, the scale of capital expenditure in 2022 is expected to decrease by 25% compared with that in 2021, and it is expected to fall back to 32.611 billion yuan. In 2021, the company’s monetary capital is 162.9 billion yuan, the interest bearing debt ratio is only 12.54%, and the asset liability ratio is 26.58% (far lower than the industry average). The attribute of cash cow is becoming stronger and stronger, becoming one of the benchmark of high profit, high cash and high dividend in the industry.
Profit forecast and investment rating: we estimate that the company’s operating revenue from 2022 to 2024 will be 360.6 billion yuan, 400616 billion yuan and 432697 billion yuan respectively, the net profit attributable to the parent company will be 60.918 billion yuan, 70.198 billion yuan and 79.498 billion yuan respectively, and the earnings per share will be 3.07, 3.54 and 4.01 yuan respectively. We believe that in the context of global energy inflation, the coal price center is expected to continue to rise in the next few years, and the price of the long-term association is expected to rise year by year. The franchise attribute of China Shenhua Energy Company Limited(601088) makes the operating performance highly deterministic. In addition, the integrated operation enables all sectors to release enough upward performance flexibility and maintain the “buy” rating.
Risk factors: the macroeconomic situation is uncertain due to the impact of the epidemic; Geopolitical factors affect the global economy; Uncertainty of policies in coal and power related industries; Safety production accidents in coal mines, etc.
