\u3000\u30 China Baoan Group Co.Ltd(000009) 83 Shanxi Coking Coal Energy Group Co.Ltd(000983) )
Event: on April 14, the company released the annual performance express of 2021. The annual operating revenue was 45.285 billion yuan, a year-on-year increase of 34.15%, the net profit attributable to the parent was 4.166 billion yuan, a year-on-year increase of 112.94%, and the net profit attributable to the parent after deduction was 4.061 billion yuan, a year-on-year increase of 143.51%.
Benefiting from the sharp rise in coking coal prices in the fourth quarter, the company’s Q4 revenue and net profit attributable to its parent company hit a new high in the same period. In the fourth quarter of 2021, the average market price of Shanxi Luliang main coking coal increased by 163.03% year-on-year. The rise in coking coal price led the company to achieve an operating revenue of 15.593 billion yuan in the fourth quarter, with a year-on-year increase of 29.99%. The net profit attributable to the parent company was 992 million yuan, with a year-on-year increase of 179.72%, both reaching a record high level in the same period.
In the first quarter, the coal price was high, and the company’s Q1 net profit attributable to the parent company hit a record high. In the first quarter of 2022, affected by Indonesia’s coal export policy and the conflict between Russia and Ukraine, overseas coking coal prices drove China’s prices to maintain a high level. In the first quarter, the average import price of coking coal in China’s major ports was 2396 yuan / ton, a year-on-year increase of 76%, and the difference with the average price of domestic coking coal ports was 340 yuan / ton, a year-on-year increase of 369%. The high coal price greatly increased the company’s profit in the first quarter year-on-year. According to the disclosure of the first quarter performance forecast released by the company, the net profit attributable to the parent company in the first quarter is expected to be 2.320-2.593 billion yuan, a year-on-year increase of 155185%, a record high level in a single quarter.
Downstream demand continues to improve, and coking coal prices are easy to rise but difficult to fall. With the end of the Winter Olympics and the two sessions, the utilization rate of blast furnace capacity has gradually climbed to the middle and high level in the same period in history. Under the expectation of “steady growth”, the recovery of steel production is expected to drive the demand for coking coal to continue to improve; The subsequent supply of coking coal is still affected by multiple factors such as insufficient new production capacity and environmental protection and safety production requirements. It is expected that the tight supply and demand of coking coal will continue, and the price is easy to rise but difficult to fall.
The company continues to acquire the group’s assets, and there are still expectations for the injection of coal mine assets in the future. In 2020, the company completed the acquisition of Shuiyu Coal Industry and Tenghui coal industry of coking coal group, and the equity production capacity increased from 27.96 million tons to 32.57 million tons; On January 17, 2022, the company issued a draft to acquire 51% equity of Huajin coking coal and 49% shares of Mingzhu coal industry with RMB 6.599 billion and RMB 443 million respectively. After the acquisition, the equity production capacity will increase by 5.13 million tons / year (4.69 million tons of Huajin coking coal and 440000 tons of Mingzhu coal industry), an increase of 15.74%. In February 2021, the assessment and signing meeting of “one enterprise and one policy” of Shanxi provincial enterprises put forward the goal of “the asset securitization rate of provincial enterprises reaches more than 80%. It is expected that the company will still have asset injection expectations in the future.
Profit forecast, valuation and rating: the high price difference of coal outside China leads to the restriction of coal import, and China’s production is affected by safety regulatory policies. We expect that with the gradual resumption of production in the steel industry, the tight supply and demand of coking coal will continue, the price will remain high, and the company still has the expectation of asset injection in the future. The company’s net profit attributable to the parent company in 2021 is 4.166 billion yuan, and the net profit attributable to the parent company in 20222023 will be increased by 102% 99% to RMB 8.774 billion and RMB 9.265 billion (excluding this asset acquisition), the corresponding EPS is RMB 2.14 and RMB 2.26 respectively, and the corresponding roe is 30.37% and 28.59% respectively, maintaining the “overweight” rating.
Risk tip: the demand for steel has fallen sharply; The import price of coking coal fell sharply.
