\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 898 China Coal Energy Company Limited(601898) )
Central enterprises with integrated and coordinated development and scarce growth China Coal Energy Company Limited(601898) is an integrated development central enterprise with coal, coal chemical industry, electric power and coal mine equipment as its core business. Coal and coal chemical industry business is the main profit source of the company. The coal business is rooted in Shanxi, Shaanxi and Inner Mongolia, with large capacity and rich reserves. Many mines under construction bring growth to the company and are the source of the company’s core profits; As of 2021, the company’s proven reserves exceeded 14.2 billion tons, including nearly 12.9 billion tons of power coal. In 2021, the company achieved 112.74 million tons of self-produced coal and 110.73 million tons of sales. The coal chemical industry is located in Shaanxi and Inner Mongolia, with stable production and internal supply of raw materials. It has the advantage of integration, and there is still room for growth in the scale of chemical industry in the future.
Coal business: under construction and put into operation, nuclear increase of production capacity, and growth can be expected. The company has 25 mines with a total production capacity of 150 million tons / year, of which the production capacity is 120 million tons. Mines under construction: the total capacity of the four mines under construction is 23.8 million tons, including dahaize coal mine (15 million tons / year, the first mining face is put into trial operation), Libi coal mine (4 million tons / year, expected to be completed in 2024), Yilan No. 3 coal mine (2.4 million tons / year, in the state of promoting maintenance construction) and Weizigou coal mine (2.4 million tons / year, expected to be completed in 2023). Nuclear increase of production capacity: the company’s east open pit coal mine (nuclear increase of 20 million tons / year to 25 million tons / year), Wangjialing coal mine (nuclear increase of 6 million tons / year to 7.5 million tons / year), Haize coal mine (nuclear increase of 15 million tons / year to 20 million tons / year) and Xinjiang 106 coal mine (1.2 million tons / year, estimated nuclear increase of Shanghai Pudong Development Bank Co.Ltd(600000) tons / year) have been included in the list of coal mines with increased production and guaranteed supply by the state, and the nuclear increase of production capacity is 12.1 million tons / year. By the end of 2021, the east open pit coal mine and Wangjialing coal mine had obtained the approval documents for capacity increase, with a total capacity increase of 6.5 million tons / year.
Joint stock companies: investment income enlarges performance elasticity China Coal Energy Company Limited(601898) shares in Zhongtian hechuang, Huajin coking coal and hecaogou coal industries, with a total capacity of 41.9 million tons / year and an equity capacity of 18.02 million tons / year (5.83 million tons / year of coking coal and 12.19 million tons / year of power coal). In 2021, Zhongtian hechuang realized an operating revenue of 16.959 billion yuan and a net profit attributable to the parent company of 4.098 billion yuan (year-on-year + 644%); Huajin coking coal achieved an operating revenue of 11.812 billion yuan and a net profit attributable to the parent company of 1.641 billion yuan (year-on-year + 253%); Hecaogou coal industry realized an operating revenue of 4.312 billion yuan and a net profit attributable to the parent company of 2.203 billion yuan (year-on-year + 236%). In 2021, the investment income was 3.545 billion yuan, accounting for 13.86% of the total profit of the company.
Coal chemical business: collaborative development, still incremental. The main products of the company’s coal chemical business are olefins, urea and methanol. The total capacity of coal chemical industry is 4.55 million tons / year and the equity capacity is 4.4 million tons / year. Among them, the current production capacity includes Shanghai Pudong Development Bank Co.Ltd(600000) tons / year of polyethylene, Shanghai Pudong Development Bank Co.Ltd(600000) tons / year of polypropylene, 1.75 million tons / year of urea and 1.6 million tons / year of methanol; The project under construction has a capacity of 300000 t / a polyethylene and 450000 T / a polypropylene of Yulin Energy Chemical. In addition, the joint-stock company Yanchang coal Yulin Energy Chemical has a polyethylene production capacity of 1.9 million tons / year and a methanol production capacity of 3.6 million tons / year. Zhongtian hechuang has a polyethylene production capacity of 1.37 million tons / year and a methanol production capacity of 3.6 million tons / year. In 2021, the company internally digested 7.41 million tons of self-produced coal. Among them, Inner Mongolia Shaanxi coal chemical project procurement company has 4.62 million tons of coal. Methanol is partly supplied internally, and the internal consumption accounts for 65%, with obvious synergistic advantages.
Profit forecast and Valuation: the proportion of the company’s long-term association is as high as 80%. The benchmark price of the long-term association has been raised from 535 yuan / ton to 675 yuan / ton since 2022. The company will fully benefit and ensure its long-term performance. We predict that the company’s net profit attributable to the parent company from 2022 to 2024 will be 25.349 billion yuan, 29.257 billion yuan and 31.685 billion yuan respectively, with a year-on-year increase of 91%, 15% and 8%, equivalent to EPS of 191, 2.21 and 2.39 yuan / share respectively. The current share price is 9.39 yuan, corresponding to PE of 4.9, 4.3 and 3.9 times respectively. Considering the high prosperity of the industry, the company benefited from the improvement of the pricing benchmark of the long-term association. At the same time, the scale of the main industry coal and chemical industry is still growing, the valuation is low, and the company is given a “buy” rating for the first time.
Risk tips: (1) the risk of coal price falling beyond expectations. (2) The progress of Mines under construction and nuclear added mines is less than the expected risk. (3) Risk of sharp rise in coal chemical costs. (4) Macroeconomic downturn risk. (5) The public materials used in the research report may have the risk of information lag or untimely update.
