\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 985 Huaibei Mining Holdings Co.Ltd(600985) )
Key investment points
Coking coal is the leading coal in East China, with all kinds of coal and large scale. Huaibei mining area under the company is an important part of Lianghuai coal base, a national 100 million ton large coal base. It is a coking production enterprise with the most complete varieties of coking coal and the largest smelting capacity in a single mining area in East China Huaibei Mining Holdings Co.Ltd(600985) products are mainly coking clean coal, accounting for about 50% of the output of commercial coal, covering coking coal, fat coal, lean coal, 1 / 3 coking coal, lean coal, gas coal and other varieties, with unique coal advantages. By the end of 2021, the company’s production capacity was 35.55 million tons / year and its equity capacity was 325883 million tons. By the end of 2020, the coking coal washing capacity was 29 million tons / year, of which Linhuan Coal Preparation Plant ranked among the top in China with a capacity of 16 million tons / year. The main products of the company’s coal chemical business are coke. At present, it has the ability to produce a relatively complete series of coal chemical products such as coke, methanol, tar, ammonium sulfate, crude benzene and refined benzene. By the end of 2021, the company has a coke production capacity of 4.4 million tons / year; Methanol production capacity of 900000 T / a (500000 t is expected to be put into operation in 2022); The ethanol capacity under construction is Shanghai Pudong Development Bank Co.Ltd(600000) T / a (expected to be put into operation in 2024).
Coal: 3 million tons of Xinhu are put into operation and 8 million tons of taohutu are newly built, laying the foundation for growth. Xinhu coal mine was officially put into operation in 2021, with an approved capacity of 3 million tons / year. The coal types are coking coal and 1 / 3 coke. It is expected that the capacity utilization rate will be about 70% in 2022 (it is expected to bring an increase of 1.5 million tons of coking coal), and reach the production capacity in 2023 Huaibei Mining Holdings Co.Ltd(600985) successfully expanded the new mining area in 2022 and obtained the approval for the construction of taohutu coal mine, with an approved capacity of 8 million tons / year. Taohutu coal mine is located in Inner Mongolia Eerduosi Resources Co.Ltd(600295) nalinhe mining area. It is a high-quality power coal mine with a calorific value of more than 6000 kcal. The company holds 51% of its shares and is expected to be completed and put into operation during the 14th Five Year Plan period. Its operation will alleviate the disadvantage of low calorific value of the company’s thermal coal and bring the company’s competitive advantage of high calorie coal.
Coal chemical industry: low cost, high price and large profit elasticity. Benefiting from the high prosperity of the industry, the price of coal chemical products of the company remained high and contributed to the increment of performance. In 2021, the unit selling price of the company’s coal chemical industry was 2850 yuan / ton, with a year-on-year increase of 50%, of which the selling prices of coke and methanol were 2646 and 2259 yuan / ton, with a year-on-year increase of 49% and 42% respectively Huaibei Mining Holdings Co.Ltd(600985) coal chemical raw material coal self-sufficiency rate is about 50%. The self-produced washed coal can meet the production demand of coal chemical industry to a great extent, has strong cost competitive advantage and locks in the profits of the industrial chain. In addition, the company’s comprehensive utilization of coke oven gas to produce 500000 tons of methanol project has been put into trial production in December 2021 and is expected to be officially put into operation before the end of June 2022; The Shanghai Pudong Development Bank Co.Ltd(600000) ton ethanol production project of methanol comprehensive utilization project has been started in December 2021, and the EPC contract has been signed. It is expected to be completed and put into trial production by the end of 2023 and officially put into operation in 2024. We expect that the high prosperity and high price sustainability of the coal chemical industry will add to the company’s coal chemical production capacity and bring greater flexibility to the company’s performance.
Differentiated cash dividend policy, a high proportion of dividends may be worth looking forward to Huaibei Mining Holdings Co.Ltd(600985) . Among them, formulate differentiated cash dividend policies: if the development stage of the company is mature and there is no / no major capital expenditure arrangement, the minimum proportion of cash dividend shall reach 80% and 40% during profit distribution. At present, the industry is in a mature stage, and the scale of the company’s capital expenditure is controllable. Under the background of the current high prosperity of the coal industry, high cash dividends may be worth looking forward to. In 2021, the net profit attributable to the parent company (RMB 4.78 billion) and net cash flow from operating activities (RMB 11.053 billion) have reached new highs since backdoor listing. We believe that the company has the ability and willingness to pay high proportion of cash dividends.
Profit forecast, valuation and investment rating: we estimate that the company’s operating revenue from 2022 to 2024 will be 73.953 billion yuan, 77.496 billion yuan and 79.084 billion yuan respectively, and the net profit attributable to the parent company will be 6.057 billion yuan, 6.868 billion yuan and 6.866 billion yuan respectively. The current share price is 15.06 yuan and the corresponding PE is 6.2x/5.4x/5.4x respectively. Considering the high quality of the company’s overall assets, low valuation and the good coking coal market, First coverage and “buy” rating.
Risk tip: there is a risk that the capacity utilization rate of newly put into operation mines is lower than expected, the coal price has fallen sharply, the capital expenditure is higher than expected, and the research report use information data is not updated in time.
