\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 088 China Shenhua Energy Company Limited(601088) )
Event: the company released the first quarter report of 2022. In the first quarter of 2022, the company achieved an operating revenue of 83.9 billion yuan, a year-on-year increase of 24.1% and a month on month decrease of 18%; The net profit attributable to the parent company was 18.96 billion yuan, an increase of 63.3% year-on-year and 99.2% month on month; The net profit of deducting non return to parent was about 18.62 billion yuan, a year-on-year increase of 60.7% and a month on month increase of 92.6%. The sales volume & selling price of trade coal decreased slightly month on month, resulting in the decrease of revenue month on month; The profitability of power, railway and other businesses improved, jointly driving the rise of net profit month on month.
Coal: the production and sales of self-produced coal are stable, and the selling price is at an all-time high. In the first quarter of 2022, the company’s coal sector achieved a revenue of 67.85 billion yuan, a year-on-year increase of 20.5% and a month on month decrease of 27%; The gross profit was 24.08 billion yuan, an increase of 79.2% year-on-year and a decrease of 21.2% month on month; The gross profit margin was 35.5%, up 11.6pct year-on-year and 2.6pct month on month. In terms of production and sales, the output / sales volume of commercial coal of the company in the first quarter was 0.8/110 million tons, with a year-on-year increase of 3.6% / – 8.4%; Among them, the annual sales volume of Changxie coal was 5.44 billion tons, a year-on-year increase of 10.8% and a month on month increase of 0.6%. In terms of price, the company sold 624 yuan per ton of coal in the first quarter, up 31.4% year-on-year; The annual sales price increased by 516.9% year-on-year, with a decrease of 23.7% year-on-year; The spot price was 773 yuan / ton, up 59.7% year-on-year and down 6% month on month; The monthly selling price of the long-term association was 787 yuan / ton, up 28.4% year-on-year and down 1% month on month. In terms of cost, the cost per ton of coal produced by the company in the first quarter was 150 yuan / ton, with a year-on-year increase of 16.8% (the cost of outsourcing stripping fee and other costs increased) and a month-on-month decrease of 21%. In the future, the company’s sales are mainly based on the long-term association, and the annual long-term association coal is strictly implemented in accordance with the pricing mechanism of “benchmark price + floating price” stipulated by the national development and Reform Commission. Benefiting from the increase of the benchmark price of the long-term association (from 535 to 675), the price center of the company is expected to move up. In April 2022, the production capacity of the company’s Shenshan open pit coal mine increased from Shanghai Pudong Development Bank Co.Ltd(600000) tons / year to 1.2 million tons / year, the production capacity of huangyuchuan coal mine increased from 10 million tons / year to 13 million tons / year, and the production capacity of qinglongsi coal mine increased from 3 million tons / year to 4 million tons / year, with a total increase of 4.6 million tons / year. In addition, the company obtained the exploration certificate of Taigemiao South District, Xinjie, and the continuous allocation of coal resources was promoted in an orderly manner.
Electricity: the installed capacity increases, the electricity price rises, and the expected volume and price of the sector rise together. In the first quarter of 2022, the revenue of the power sector reached 20.44 billion yuan, an increase of 51.9% year-on-year and 8.7% month on month; The gross profit was 3.27 billion yuan, a year-on-year increase of 37.3%, turning losses into profits month on month; The gross profit rate increased by 16.7pct year-on-year, with a decrease of 16.1%. In terms of production and marketing, the power generation / sales of the company in the first quarter was 4.68/4.4 billion kwh, with a year-on-year increase of 25.7% / 26.1%, a month on month increase of 7.7%, and the average utilization hours were 1234 hours (year-on-year + 4.8%). In terms of selling price, the company’s comprehensive selling price in the first quarter was 411 yuan / MWh, an increase of 21.6% year-on-year and 7.6% month on month. By the end of 2021, the total capacity of generator assemblies under construction, approved but not yet under construction by the company was 8800 MW, with full growth potential. In terms of cost, the company’s kwh cost in the first quarter was 371.9 yuan / MWh, an increase of 21.7% year-on-year and a decrease of 16.8% month on month. In the future, in order to protect people’s livelihood and alleviate the pressure brought by high coal prices, many places began to slightly adjust the electricity price mechanism and moderately liberalize the upward limit of electricity price. The power sector of the company is expected to realize the simultaneous rise of volume and price.
Transportation & coal chemical industry: with the rise of shipping price, the profitability of coal chemical industry has improved. On the one hand, the gross profit of railway transportation companies increased by 2.3 billion yuan in the first quarter, a decrease of 2.5% over the same period last year; The gross profit of port transportation was 790 million yuan, a year-on-year decrease of 3.8% and a month on month increase of 6%; Shipping realized a gross profit of 380 million yuan, up 38.7% year-on-year and 31.5% month on month. In terms of coal chemical industry, the sales of polyethylene and polypropylene of the company in the first quarter were 91000 tons and 87000 tons respectively, with a year-on-year decrease of 4.2% and 3.3% respectively. The gross profit of the company’s coal chemical industry sector was 320 million yuan, with a year-on-year decrease of 21.8% and a month on month increase of 1400%; The gross profit margin was 19.1%, a year-on-year decrease of 6.2pct and a month on month increase of 17.2pct.
The dividend ratio is as high as 100% and the dividend rate is as high as 9.3%. In order to positively repay shareholders, the company plans to pay a final dividend of 2.54 yuan / share in 2021, which is significantly increased to 100.4% compared with the previously specified 50% (lower limit). Based on the closing price on April 27, the dividend rate is as high as 9.3%. Considering the stable profitability of the company’s integrated operation of “coal electrification Road, port and waterway”, sufficient cash flow and capital expenditure expected to decline gradually, high dividends in the future are still worth looking forward to.
Investment advice. From 2022 to 2024, the company is expected to realize a net profit attributable to the parent company of 73.79 billion yuan, 80.09 billion yuan and 82.44 billion yuan, with EPS of 371 yuan, 403 yuan and 4.15 yuan respectively, corresponding to PE of 7.8, 7.2 and 7.0 respectively, maintaining the “buy” rating.
Risk tip: the coal price has fallen precipitously, the benchmark price of the long-term association has been lowered, the on grid electricity price has been lowered, and the company has a safety accident.
