Yankuang energy ( Yanzhou Coal Mining Company Limited(600188) )
Event: on March 30, 2022, the company released its annual report for 2021. During the reporting period, the company realized an operating revenue of 151990 billion yuan, a year-on-year decrease of 29.30%; The total profit was 18.567 billion yuan, a year-on-year increase of 171.54%; The net profit attributable to the parent company was 16.259 billion yuan, a year-on-year increase of 128.30%; The net profit attributable to the parent company after deduction was 16.212 billion yuan, an increase of 148.09% year-on-year; The basic earnings per share was 3.34 yuan, an increase of 1.88 yuan / share compared with 2020. According to the company’s dividend plan, the company’s dividend in 2021 is 2.00 yuan / share (1.6 yuan / share ordinary dividend + 0.4 yuan / share special dividend), with a total dividend of 9.897 billion yuan (including tax). The dividend proportion exceeds the minimum 50% of the company’s dividend planning commitment, reaching 60.87%. In the fourth quarter, the company realized an operating revenue of 46.955 billion yuan, a year-on-year decrease of 6.65% and a month on month increase of 18.41%. The net profit attributable to the parent company was 4.727 billion yuan, with a year-on-year increase of 321585% and a month on month decrease of 13.89%; The net profit attributable to the parent company after deducting non profits was 4.453 billion yuan, an increase of 173.39% year-on-year and a decrease of 21.70% month on month. The company’s net profit attributable to the parent company decreased month on month in the fourth quarter, mainly due to the company’s provision for asset impairment of RMB 1.704 billion, which affected the company’s net profit attributable to the parent company to decrease by RMB 938 million.
Comments:
Affected by the regional safety and environmental protection policies, the superimposed trade coal business was steadily stripped off, and the production and sales of commercial coal of the company decreased. The company produced 105 million tons of commercial coal in 2021, a decrease of 15.25 million tons (- 12.68%) compared with 2020. The sales volume of self-produced commercial coal was 93.832 million tons, a year-on-year decrease of 18.938 million tons (- 16.80%). Shandong headquarters (company + Heze Nenghua) sold 25.071 million tons of commercial coal, a year-on-year decrease of 6.259 million tons (- 19.98%); Shaanxi Inner Mongolia base (future energy + Inner Mongolia Eerduosi Resources Co.Ltd(600295) energy and chemical industry + Haosheng coal industry + Inner Mongolia mining industry) sold 25.126 million tons of commercial coal, a year-on-year decrease of 12.131 million tons (- 32.56%), and Australia base (Yanmei Australia + Yanmei International) sold 42.37 million tons of commercial coal, a year-on-year decrease of 158000 tons (- 0.37%). In the first half of the year, affected by the safety and environmental protection policies, the output and sales volume of Shandong base and Shaanxi Inner Mongolia base decreased significantly, and the production gradually recovered in the second half of the year, but the production and sales volume of the whole year was under pressure. Looking forward to 2022, under the background of ensuring supply, the factors of output suppression are expected to improve; With the gradual release of the production capacity of 10 million tons of coal mines in yingpanhao and shilaosu, the output of the Australian base remains stable, and the overall coal production and sales volume of the company is expected to rise steadily.
Benefiting from the rising coal price, the profit of the company’s coal business increased significantly. In 2021, the average selling price of commercial coal produced by the company was 716.8 yuan / ton, with a year-on-year increase of 297.37 yuan / ton (70.90%), and the gross profit margin was 49.39%, with a year-on-year increase of 2.25 PCT, realizing a gross profit of 33.223 billion yuan. Among them, the average selling price of commercial coal in Shandong headquarters was 919.09 yuan / ton, a year-on-year increase of 343.66 yuan / ton (59.72%), the gross profit margin was 57.4%, a year-on-year increase of 2.92 PCT, and the gross profit was 13.223 billion yuan, accounting for 39.8% of the gross profit of coal business. The average selling price of commercial coal in Shaanxi Inner Mongolia base is 628.33 yuan / ton, with a year-on-year increase of 318.89 yuan / ton (103.06%), the gross profit rate is 55.9%, a year-on-year decrease of 6.03 PCT, and the gross profit is 8.829 billion yuan, accounting for 26.57% of the gross profit of coal business. The average selling price of commercial coal in Australia base was 657.04 yuan / ton, with a year-on-year increase of 250.8 yuan / ton (61.74%), and the gross profit margin was 39.6%, with a year-on-year increase of 9.49 PCT, realizing a gross profit of 11.037 billion yuan, accounting for 33.22% of the gross profit of coal business. In terms of cost, during the reporting period, the company reclassified the transportation expenses to the cost of sales, which suppressed the gross profit margin. After excluding this part of the cost, the year-on-year improvement of the gross profit margin will be more significant. It is expected that in 2022, the central price of coal at home and abroad will be significantly higher than that in 2021, and the gross profit and gross profit margin of the company’s coal business will be further improved.
The price and quantity of products in the chemical sector have risen, and the development is ready to sail. The company produced 5.794 million tons of chemical products in 2021, with a year-on-year increase of 1.21 million tons (26.59%); Among them, the output of methanol was 2.503 million tons, with a year-on-year increase of 680000 tons (37.3%); The output of ethylene glycol increased by 292000 tons. The transformation of the company’s high-end chemical and new materials business is progressing smoothly, the coal chemical phase II project of Inner Mongolia Eerduosi Resources Co.Ltd(600295) energy chemical has been successfully put into operation, and the output of methanol and ethylene glycol has increased; Lunan Chemical’s 300000 t / a caprolactam equipment was successfully put into operation at the end of 21. It is expected that the output and profit of the company’s coal chemical products will be further increased in 22 years. In terms of price, the profitability of the chemical sector increased significantly. In 2021, the company’s chemical business realized a gross profit of 21.402 billion yuan, a year-on-year increase of 103.5%. The average selling price of chemical products was 407968 yuan / ton, a year-on-year increase of 162028 yuan / ton (65.88%); The gross profit margin of chemical business is 32.01%, an increase of 20.33 PCT over 2020. Under the background of soaring oil and gas prices, combined with the implementation of the dual control policy that China’s raw material energy consumption is not included in energy consumption, modern coal chemical industry with coal sources will significantly benefit. It is expected that the coal chemical industry will remain prosperous in 22 years. The company will actively seek breakthroughs in the research, transformation and application of key core technologies such as clean and efficient utilization of coal.
Maintain strategic concentration and counter cyclical investment layout to create the company’s sustainable high growth potential. During the 13th Five Year Plan period, based on its deep understanding of the energy pattern and coal industry, the company resolutely increased capital expenditure during the downturn of the industry, arranged several ten million ton mines in Shaanxi and Inner Mongolia in a reverse cycle, built Wanfu Coal Mine with an annual output of 1.8 million tons of coking coal in Shandong, acquired United Coal in Australia in 17 years (Australia’s top coal assets), and reorganized Inner Mongolia mining in 20 years (51% equity), In the same year, it acquired 49.315% equity of future energy, 100% equity of Lunan Chemical and other chemical and equipment companies from the original Yankuang Group at a cash consideration of 18.355 billion yuan, deeply integrated the industrial chain, realized the leapfrog development of the company and strengthened its competitive advantage in the industry. In 2021, only the future energy and Lunan Chemical assets will create a net profit of 8.990 billion yuan for the company, with an annualized rate of return of more than 49%. The counter cyclical layout of coal and chemical sectors has laid a solid foundation for the endogenous growth of the company in the future, and has become a very scarce coal company with growth attributes.
Vigorously implement the reform of state-owned enterprises, carry out two rounds of equity incentives, and fully mobilize the entrepreneurial enthusiasm of employees and officers. Since 2018, the company has carried out three rounds of equity incentive schemes internally with Yanmei Australia. By the end of 2021, the current and outgoing directors, supervisors and senior managers of the company have held 977700 A shares of the company. The reform of mixed ownership of the company ranks at the forefront of the industry, and the level of corporate governance ranks among its peers. In 2021, the dividend proportion of the company exceeded the promised proportion by 60%, and high dividend goes hand in hand with high growth.
Actions speak louder than words, and the company’s development strategy will be implemented orderly and steadily. Based on the “Yankuang energy development strategy outline” issued by the company in the second half of last year, the company will formulate and implement the “sub plan” of five major industries this year. In terms of mining, it is proposed to seek access to a number of high-quality mining resources with good development prospects and low investment cost, and expand resources and capital reserves. The high-end chemical new material industry will go deep into benchmarking the benchmark enterprises in the industry, improve the production process, optimize the product structure and reduce the production cost. The new energy industry will seize the opportunity, make a comprehensive layout, strengthen capital operation, carry out mergers and acquisitions in a timely manner, and increase the proportion of the new energy industry. The high-end equipment manufacturing industry focuses on high-end series of main products and develops the market with the “Yankuang” brand. Accelerate the construction of Luxi smart manufacturing park, strengthen joint venture and cooperation in strategic projects, and realize complementary advantages, resource sharing and linkage development.
Profit forecast and investment rating: Based on the continuous rise of the average price of coal outside China in the fourth quarter of last year, especially since the first quarter of this year, and the endogenous growth space of the company’s coal and chemical business, we raised the company’s profit forecast. It is estimated that the company’s net profit attributable to the parent company from 2022 to 2024 will be 288.65 billion yuan, 34.578 billion yuan and 40.190 billion yuan respectively, and EPS will be 5.83, 6.99 and 8.12 yuan respectively, The corresponding PE is 6.6, 5.5 and 4.7 times respectively (closing price of 38.34 yuan on March 31, 2022). We are optimistic about the growth space of the company’s endogenous extension and the implementation of cost reduction and efficiency enhancement, so as to maintain the company’s “buy” rating.
Risk factors: serious stall of macroeconomic growth; 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.
