China Shenhua Energy Company Limited(601088) volume and price rise together to welcome a good start

\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 088 China Shenhua Energy Company Limited(601088) )

Matters:

The company released the first quarter report of 2022. During the reporting period, the company’s revenue was 83.902 billion yuan, a year-on-year increase of 24.1%; The net profit attributable to the parent company was 18.957 billion yuan, a year-on-year increase of 63.3%; The basic earnings per share is RMB 0.954.

Ping An View:

The volume and price of coal rose simultaneously, and the production capacity increased by 4.6 million tons / year: in Q1 2022, the company made every effort to stabilize the production and price expectations, so as to ensure the increase of coal production and supply. The output of commercial coal was 81 million tons, an increase of 3.6%. In terms of coal production capacity, the company increased the production capacity of three coal mines by 4.6 million tons / year. According to the quarterly report, the average sales price of coal rose, and the profit of the coal segment increased significantly.

The power supply is fully guaranteed, and the sold power increases sharply: in Q1 2022, the company ensures the safety and stability of power supply. The total power generation of the company was 46.75 billion kwh, an increase of 25.7%, and the total power sales was 43.99 billion kwh, an increase of 26.1%. Since unit 1 of Luoyuanwan project was put into operation at the end of last year, unit 2 has also been officially put into commercial operation recently, increasing the power generation capacity of 1 million KW.

The benchmark price of the long-term association has increased, and the company’s performance is more stable: the benchmark price of the long-term association of coal has increased from 535 yuan / ton to 670 yuan / ton. The lower price limit is higher than the previous benchmark price, and the coal price center has increased significantly. It is expected that the power coal company with a high proportion of the long-term association will operate more steadily.

Profit forecast: Based on the high energy prices outside China in 2022 and the company’s recent operation, we raised our performance forecast. It is estimated that the company’s net profits in 202224 will be 60.59 billion, 62.13 billion and 63.84 billion respectively (the original values are 54.33 billion, 55.67 billion and 56.72 billion respectively), maintaining the “recommended” rating.

Risk tips: 1. The new production capacity has increased significantly, coal supply exceeds demand, and the decline of coal price affects the company’s performance; 2. Carbon neutralization constraints and rapid development of new energy affect coal demand; 3. Covid-19 epidemic control was less than expected, affecting China’s coal and power demand; 4. If a coal mine safety accident occurs, it may affect the relevant business of the company.

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