\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 666 Pingdingshan Tianan Coal Mining Co.Ltd(601666) )
Event: the company released the first quarter report of 2022. In the first quarter of 2022, the company achieved an operating revenue of 9.68 billion yuan, a year-on-year increase of 53.3%; The net profit attributable to the parent company was 1.63 billion yuan, a year-on-year increase of 199.4%; The net profit deducted from non parent company was about 1.65 billion yuan, with a year-on-year increase of 206.2%.
The performance increased quarter by quarter and continued to hit a record high. Quarterly, from Q2 to Q2 in 2021, Q1 company achieved net profit attributable to parent company of 510 million yuan, 710 million yuan, 1.15 billion yuan and 1.63 billion yuan respectively, and its performance increased quarter by quarter, reaching a record high; Among them, the net profit attributable to the parent company in Q1 in 2022 increased by 41.7% month on month, and the net profit excluding non attributable to the parent company increased by 41% month on month, mainly because the company’s coal price has been at an all-time high since Q4 in 2021, and a number of losses and expenses (asset impairment loss of 20.21 million yuan, credit impairment loss of 170 million yuan and asset disposal loss of 280000 yuan) were accrued in Q4 in 2021. The burden of Q1 in 22 years was reduced, which promoted the release of performance.
The supply and demand pattern of coking coal has not been fundamentally reversed, and the price still has room to rise. On April 19, the national development and Reform Commission set the task of reducing crude steel without mentioning the reduction scale. We believe that even if the crude steel output is reduced, the tight supply and demand of coking coal this year is difficult to be substantially reversed (especially the main coking coal). At present, the inventory of all links in society is at the lowest level in history and still shows the trend of destocking. After the epidemic situation is controlled, the steel mills will actively resume work and production, the daily average hot metal output is expected to maintain an upward trend, and the macro stimulus and real estate expectations are good, with full potential for future demand increment; Superimposing the current inventory at the historical absolute low in the same period, there is a strong demand for active replenishment. Under the background of limited space for China’s coking coal production, limited customs clearance of imported Mongolian coal and high coking coal prices in the international market, China’s coking coal prices want to rebound strongly. The company is the largest producer and supplier of low sulfur and high-quality main coking coal in China. The coal type is mainly high-quality main coking coal with strong bargaining power. The company’s coking coal long-term association price implements the “annual quantitative and quarterly price adjustment” mechanism. The company’s Q2 price still has room to rise, and its performance is expected to continue to grow.
Enter the coking project and broaden the industrial territory. The company plans to invest 700 million yuan to establish a joint venture with Rufeng coking (70% of the company’s shares), build a coking project with an annual output of 1.2 million tons, and support the construction of relevant chemical production and deep processing projects, so as to extend the industrial chain and expand the comprehensive strength. According to the calculation of the feasibility study report, after the project is completed and put into operation, the annual operating income and total profit of the project will be 2.696 billion yuan and 245 million yuan, with a total return on investment of 13.7% and a total investment payback period (before tax) of 7.1 years. Equity incentive shows development confidence. The company adjusted the performance assessment objectives of equity incentive, and mentioned that the growth rate of net profit in 2022 compared with that in 2020 shall not be less than 40%, EPS shall not be less than 0.89 yuan, and roe shall not be less than 11.94%; Compared with the net profit in 2020, the growth rate in 2023 shall not be less than 60%, EPS shall not be less than 1.02 yuan, and roe shall not be less than 12.01%; Compared with the net profit in 2020, the growth rate in 2024 is not less than 80%, EPS is not less than 1.14 yuan, and roe is not less than 11.90%. The performance appraisal target has increased year by year, which is enough to demonstrate the senior management’s confidence in the long-term and steady development of the company.
Stripping of auxiliary industries, light loading, cost reduction and efficiency enhancement continued to be promoted. According to the principle of “lean and efficient main business and independent development of auxiliary business”, the company plans to spin off the production auxiliary and life service institutions (including personnel and business) and related assets not directly related to the main coal business to China Pingmei Shenma Group, which will optimize, restructure and develop the auxiliary business independently. The main target is to set up auxiliary business institutions such as production and maintenance services and logistics services in various grass-roots units. At the same time, the company vigorously implements the strategy of “cost reduction and efficiency increase”. The company deploys the ten-year plan for human resources reform, actively and steadily promotes the “great job transfer of 10000 mining workers”, and strives to optimize the number of coal mine workers to less than 40000 in 5-8 years, so as to greatly improve the per capita work efficiency; By the end of 2021, the company had 65300 employees, a year-on-year decrease of 12.1% compared with 74300 at the end of 20, with remarkable results. The dividend yield is as high as 5.3%, highlighting the investment value. The company plans to pay dividends in 2021 based on the company’s total share capital of 2.32 billion shares, with a cash dividend of 0.76 yuan per share, a total of 1.76 billion yuan, with a dividend ratio of 60.2%. Based on the closing price on April 27, the dividend rate is as high as 5.3%. Based on the 60% guaranteed dividend and combined with the forecast, we expect to pay a dividend of 4.82 billion yuan in 2022, with a dividend rate of 13.3% based on the closing price on April 14.
Investment advice. It is estimated that the net profit attributable to the parent company will be 7.16 billion yuan, 7.95 billion yuan and 8.42 billion yuan from 2022 to 2024, and the corresponding PE will be 4.6, 4.2 and 3.9 respectively. As the leader of coking coal in central and southern China, the company has stable downstream users and good geographical location conditions. In addition, the effectiveness of the company’s “clean coal strategy” and “cost reduction and quality improvement” has gradually emerged, laying a solid foundation for high-quality development. The company has a high and stable dividend plan and maintains the “holdings increase” rating.
Risk tip: coal prices have fallen sharply; Clean coal production fell.
