\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 740 Shanxi Coking Co.Ltd(600740) )
Event: on April 25, 2022, the company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the net profit attributable to the parent company was 1.26 billion yuan, a year-on-year increase of 14.86%; In the first quarter of 2022, the company realized a net profit attributable to the parent company of 540 million yuan, with a year-on-year increase of 19.68%.
Impairment affects the release of 21q4 performance. According to the calculation of the announcement, the net profit attributable to the parent company of 2021q4 is -586 million yuan, and the profit turns from positive to negative, mainly due to the impairment of about 850 million yuan accrued by the holding subsidiary Feihong chemical (equity 75.03%). The provision of asset impairment affects the release of the company’s performance.
China Coal Huajin contributed considerable investment income. In 2021, the company confirmed that the investment income of China Coal Huajin was 1.862 billion yuan, an increase of 282 million yuan or 17.85% compared with 1.58 billion yuan in 2020. In the first quarter of 2022, the company’s net investment income was 620 million yuan, a year-on-year increase of 99.3%.
The cost increased significantly and the gross profit margin of coke decreased. In 2021, the annual coke output was 3.4644 million tons, with a year-on-year increase of 3.87%; The sales volume was 3.4632 million tons, a year-on-year increase of 3.43%. The annual average selling price of coke was 252457 yuan / ton, a year-on-year increase of 48.13%; The cost per ton of coke was 239491 yuan / ton, with a year-on-year increase of 58.8%. Overall, the gross profit margin of coke business was 5.14%, down 6.38 percentage points from 2020. In the first quarter of 2022, the company produced 884700 tons of coke, a year-on-year increase of 3.3%, sold 887300 tons of coke, a year-on-year increase of 9.3%, and the selling price of tons of coke was 261154 yuan / ton, a year-on-year increase of 24.8%. In terms of cost, in the first quarter of 2022, the purchase unit price of washed coal of the company was 195479 yuan / ton, with a year-on-year increase of 65.68%. The sharp rise of the cost side has compressed the profit space of the company’s coke business.
The proposed cash dividend is 30.49% and the dividend yield is 2.45%. It is proposed to distribute cash dividends of RMB 1.5 (including tax) for every 10 shares, with a cumulative cash dividend of RMB 384 million, accounting for 30.49% of the net profit attributable to the parent company. Based on the stock price on April 25, 2022, the dividend rate is 2.45%.
Investment income is expected to thicken, supporting the company’s profits. At present, affected by the epidemic, the logistics is limited, and the coke presents a weak situation of both supply and demand. If the epidemic is effectively controlled in the later stage, the demand is expected to pick up under the stimulation of infrastructure and real estate policies. However, the trend of upstream coking coal is stronger, the profit is eroded by the cost side, and the profit space of the main coking industry is limited. However, the company holds 49% equity of China Coal Huajin. Its main coal products are national scarce high-quality lean coal. It has stable and strong sustainable profitability and will become a favorable support for the company’s profitability.
Investment suggestion: we estimate that the net profit attributable to the parent company from 2022 to 2024 will be RMB 1.729/1.836/1.993 billion, the corresponding EPS will be 0.67/0.72/0.78 respectively, and the corresponding PE on April 25, 2022 will be 9 times, 9 times and 8 times respectively. For the first time, give a “cautious recommendation” rating.
Risk tip: the macroeconomic growth rate was lower than expected, the investment income of China Coal Huajin was lower than expected, and the coke price fell sharply.
