\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 088 China Shenhua Energy Company Limited(601088) )
Integrated operation of core assets, leading listed companies in the coal sector. 1) Superior coal resource endowment: China Shenhua Energy Company Limited(601088) core resources are located in Shendong and Zhungeer mining areas, with the highest quality and abundant resources. The recoverable reserves are 14.15 billion tons, and the estimated service life is up to 31 years; With advanced production capacity and extremely low cost, China has an approved production capacity of 334.8 million tons, of which 40% are open-pit mines with low mining cost, and the level of mechanized and intelligent operation is leading in the industry. 2) The operating mileage of self operated railway reaches 2408 km: China Shenhua Energy Company Limited(601088) operates a total of 10 self owned railway lines including Shuohuang Railway, with the advantage of franchise right of West to east coal transportation; The railway freight rate is independent and controllable. Shaanxi and Inner Mongolia realize the launching of coal through self operated railway. The freight rate is low, the transportation distance is short, and the competitive advantage is obvious. 3) Coal fired power plants are distributed all over the southeast coast and go deep into the hinterland of demand: the installed power capacity of the company is 37899 MW, of which the installed capacity of coal-fired power accounts for more than 95%, and the self owned coal accounts for more than 80% of the coal consumption of the power sector. The coal-fired power pool makes the coal cost of the power generation division not affected by the fluctuation of coal price and locks in profits China Shenhua Energy Company Limited(601088) relying on coal resources, it has built an integrated operation network of railways, ports, shipping, power plants and chemical plants, forming its unique core competitiveness. The leading position of Listed Companies in the coal sector is unshakable.
Coal: short-term increment and long-term growth. 1) The examination and approval of coal mine land will be actively promoted, and the orderly release of 10 million tons of large mine capacity will bring about coal increment. In 2021, 667 hectares of land for continuous production of Beidian Shengli No. 1 open pit mine (28 million tons / year) was approved for grassland requisition; Baorixile open-pit mine (35 million tons / year) has 600 hectares, Heidaigou Open-pit Mine (34 million tons / year) has 321 hectares, and harwusu open-pit mine (35 million tons / year) has 289 hectares of continuous mining land, which has obtained the preliminary approval of construction land. 2) Progress has been made in the acquisition of mineral rights, laying the foundation for long-term growth. Shenhua New Street Energy Co., Ltd., a holding subsidiary, obtained the permit for detailed survey and exploration of coal resources in Taigemiao south district; The acquisition of resource warrants around Shangwan mine, Bulianta mine and Wanli No. 1 Mine in Shendong mining area has been promoted in an orderly manner; Complete the renewal of mining license of Shenshan and Shuiquan open pit mines. Among them, the total scale of Xinjie mining area is 56 million tons / year (the production capacity increases by 15% +).
Electric power: new units are put into operation at an accelerated speed, and the moat of coal and electricity integration is strengthened. In 2021, the installed capacity of thermal power in China Shenhua Energy Company Limited(601088) power sector increased by 5620 MW, an increase of 18% year-on-year; At the same time, the power generation sector of the company has 6 thermal power projects and 11 units with a total installed capacity of 8500 MW. The power plant project under construction is expected to be completed and put into operation on or before 2024. The accelerated operation of thermal power installed capacity will continue to strengthen the profit stability of China Shenhua Energy Company Limited(601088) coal power joint venture integration China Shenhua Energy Company Limited(601088) actively carry out power marketing and increase market power revenue. The notice on further deepening the market-oriented reform of on grid electricity price of coal-fired power generation (the proportion of market-oriented trading electricity of Shenhua is about 60%), which will catalyze the rise of coal-fired power price and drive the growth of the company’s performance.
High dividend cash cow, highlighting the value of the company’s allocation China Shenhua Energy Company Limited(601088) since its listing, it has attached great importance to the return to shareholders. According to the articles of association, if the conditions are met, the profit distributed in cash every year shall not be less than 35% of the net profit attributable to the shareholders of the company in the current year. Before 2019, the company will basically carry out annual cash dividends at 40% of the net profit attributable to the parent company. According to the actual situation of the year, a large amount of special dividends were also paid (2007 and 2016). In 20192021, the company’s annual profit distributed in cash increased to no less than 50% of the net profit attributable to the company’s shareholders in that year, and the actual dividend proportion of the final dividend in 20192021 was about 57.9%, 91.8% and 100.4%. Since its listing, China Shenhua Energy Company Limited(601088) accumulated cash dividends have reached 351.5 billion yuan, which is the highest in the sector and highlights the allocation value.
Profit forecast, valuation and investment rating: Based on the rising volume and price of the company’s coal business, the continuous expansion of power business, the company’s high profit and high dividend, we expect the company’s operating revenue to be 346661 billion yuan, 356389 billion yuan and 359774 billion yuan respectively from 2022 to 2024, and the net profit attributable to the parent company to be 61.752 billion yuan, 66.566 billion yuan and 66.866 billion yuan respectively (compared with 54.540 billion yuan and 57.051 billion yuan in the previous 20222023), the earnings per share to be 3.11, 3.32 and 3.37 yuan respectively, and the current share price to be 31.03 yuan, The corresponding PE is 10.0x/9.3x/9.2x respectively, maintaining the “buy” rating.
Risk warning: limited release of coal mine capacity, risk of capital expenditure and cash dividend, and sharp decline in coal price.
