\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 546 Shanxi Coal International Energy Group Co.Ltd(600546) )
Under the background of guaranteed supply, the company’s output still increased. By the end of 2021, the company had 14 mines, with an approved capacity of 31.2 million tons / year and an equity capacity of 18.71 million tons / year. Among the 14 mines, 12 are in production and 2 are under construction. The total capacity under production is 28.2 million tons / year (equity capacity is 16.92 million tons / year). Two mines are under construction, with a total capacity of 3 million tons / year (equity capacity of 1.78 million tons / year). According to the company’s 2021 annual report, the progress of Xinshun (coal mine integration system project) project has reached 97.58%, and the progress of zhuangzihe mine project has reached 88%. The two mines are expected to enter joint trial operation within the year. Considering the production time and the low capacity utilization rate of the new mine, we expect that the new capacity will contribute about 500000 tons in 2022. At the same time, under the background of supply guarantee, the production capacity is expected to be large.
Flexible sales, fully benefiting from the rise in coal prices. The mining area of the company is located in Changzhi City, Datong City, Jincheng City, Linfen City and other places in Shanxi Province. It is adjacent to coal preparation plants, power plants and other major users in the province. Most of the coal mine owned railway dedicated lines are connected with Daqin Railway Co.Ltd(601006) , north-south Tongpu railway. At the same time, the company also has shipping business, with significant advantages in the industrial chain. Most of the company’s self-produced coal is sold by railway directly to the port or downstream customers. Therefore, in the upward cycle of coal price, the price elasticity of the company is expected to be fully released.
Low cost creates ultra-high gross profit space. By the end of 2021, the company had 14600 employees, with a per capita raw coal output of 2579 tons / person, ranking in the forefront among listed companies. With light personnel burden and high per capita efficiency, the company has the advantage of low cost. In 2021, the cost of self-produced coal is only 181 yuan / ton, and the cost control level is basically the same as that of China Shenhua Energy Company Limited(601088) and is in the forefront of listed companies. The low-cost advantage has opened up the company’s profit space. In 2021, the gross profit margin of the company’s self-produced coal was 71%. Among the listed companies in CITIC coal sector, the gross profit margin of the company’s self-produced coal business is only slightly lower than 73% of China Shenhua Energy Company Limited(601088) , ranking second in the industry.
Strictly control trade risks and pursue high-quality development. The company started from trade and has rich experience in coal trade, supply organization channels and transportation channels. Having experienced the operating difficulties in the early stage, the company took measures such as stripping non-performing assets to digest the burden of performance, and the scale of accounts receivable of the company decreased significantly. It is expected that the drag on the performance of the company is expected to be reduced in the future. At present, the company’s trade business has changed from pursuing scale to pursuing quality. In recent years, the company’s coal trade volume has declined and the trade risk has been strictly controlled. It is expected that the company’s trade coal sales volume is expected to continue to decline in 2022. On the one hand, the industry supply continues to be tight and it is difficult to organize goods sources. On the other hand, the company continues to integrate trade business and strictly control trade risks. We expect that the company’s coal trade volume may decline to about 28 million tons in 2022.
Investment suggestion: we raise the net profit attributable to the parent company from 2022 to 2024, which is expected to be 8.056/9.028/9.380 billion yuan, corresponding to EPS of 4.06/4.55/4.73 yuan / share respectively, and PE corresponding to the share price on May 17, 2022 of 4 times, 3 times and 3 times respectively. The company has flexible sales and strong performance flexibility. It is expected to fully enjoy the price dividend in the cycle of coal price rise. Under the background of new capacity put into operation, the company is expected to increase both volume and price and maintain the “recommended” rating.
Risk tips: 1) downward risk of coal price; 2) The improvement of downstream demand margin is less than expected. 3) Costs rose more than expected. 4) Industrial policy risk.
