\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 546 Shanxi Coal International Energy Group Co.Ltd(600546) )
There are abundant high-quality coal types and strong channel advantages. Coal production: Shanxi Coal International Energy Group Co.Ltd(600546) subordinate coal mines are located in the main coal producing areas such as Datong, Xinzhou, Linfen, Changzhi and Jincheng. The coal types have the characteristics of low sulfur, low ash and high calorific value. They are high-quality coking coal and power coal. They are one of the few coal enterprises in China that can provide multiple types of coal at the same time to meet the needs of different customers. By the end of 2021, the company had 13 coal mines in production, with a total capacity of 30.3 million tons / year and an equity capacity of 18.568 million tons / year; It has 3 mines under construction, with a production capacity of 3 million tons / year and an equity production capacity of 1.971 million tons / year. Coal sales: the company has an independent and perfect supply organization system and coal sales and transportation system, and has established long-term and stable cooperative relations with many high-quality users. In addition, the controlling shareholder Shan Coal Group is the only coal enterprise with coal export franchise in Shanxi Province. It has two channels for export and domestic sales. It can allocate resources in both international and Chinese markets, and has strong advantages in coal trade channels.
The clean coal strategy continued to deepen and the profitability was significantly enhanced. Increase in quantity and price: 1) the company deeply promoted the strategy of “winning with clean coal”, realized that all mines should wash all the raw coal, improved the recovery rate of clean coal, and maintained the production and marketing rate of raw coal at more than 90% in recent 5 years. The sales volume of coal was 25.468 million tons, accounting for 3.722 million tons of commercial coal, accounting for 3.722% of the company’s total sales volume; The sales of coking coal and anthracite were 7.13 million tons and 4.828 million tons, accounting for 19% and 13% respectively. 2) The company’s coal products are sold to chemical enterprises, building materials enterprises, coking plants and iron and steel enterprises in many aspects, mainly at the market price, with great coal price elasticity. The price of commercial coal increased by 94% year-on-year in 2021, which can fully enjoy the dividend of rising coal prices. Cost leadership: the company implements the cost leadership strategy, continuously optimizes the cost control system, strengthens the cost assessment, establishes the cost awareness of all staff, highlights the sustainable cost advantage, and makes every effort to maintain the industry cost leadership level. In 2021, the cost of commercial coal of the company is 181 yuan / ton, which is far lower than that of the same industry, and the profit elasticity is large. It is estimated that the profit attributable to the parent company per ton of coal is 246.8 yuan / ton, with a year-on-year increase of 279.8%.
The non-performing assets of coal trade shall be stripped off and light loading shall be started again. Since 2016, the company has gradually stripped the loss making assets of coal trading business, and the scale of coal trade has been declining. In 2021, the scale of coal trade was 30.81 million tons, a year-on-year decrease of 66.6%, with obvious contraction. With the stripping of non-performing assets, the company’s debt situation has gradually improved. In 2021, the asset liability ratio and financial expense ratio were 68.8% and 1.7% respectively, reaching a five-year low. In 2021, the gross profit of coal trading business was 996 million yuan, and the gross profit margin was 4.2%. The business profitability was significantly improved, the amount of accounts receivable and the turnover days of accounts receivable continued to decline, and the operation quality was significantly improved.
The dividend is the highest in history, and the high proportion of dividend is expected to continue. The company issued the shareholder return plan for 20212023. The annual profit distributed in cash shall not be less than 10%, and the cumulative cash dividend in recent three years shall not be less than 30% of the average annual distributable profit in three years. At the same time, formulate differentiated cash dividend policies: when the development stage of the company is mature and there is no / significant capital expenditure arrangement, the minimum proportion of cash dividend should reach 80% or 40%. In 2021, the amount of cash dividends was 3.107 billion yuan, the pre tax dividend per share was 1.567 yuan / share, and the dividend payment rate reached 62.91%, which was the highest in history. We believe that the company is currently in a mature stage, and its capital expenditure scale is expected to maintain a low level. Under the background of the current high prosperity of the coal industry, the high proportion of cash dividends is expected to continue.
Earnings forecast, valuation and investment rating: we estimate that the company’s operating revenue from 2022 to 2024 will be 45.537 billion yuan, 44.109 billion yuan and 44.417 billion yuan respectively, the net profit attributable to the parent company will be 6.502 billion yuan, 6.998 billion yuan and 7.491 billion yuan respectively, the earnings per share will be 3.28, 3.53 and 3.78 yuan respectively, the current share price will be 14.54 yuan, and the corresponding PE will be 4.4x/4.1x/3.8x respectively. Considering that the coal price of the company is the market price, coupled with the high operation of coal price, the profitability is expected to be better and the valuation is low, it is covered for the first time and given a “buy” rating.
Risk tip: there is a risk that the coal price has fallen sharply, the capacity utilization rate is lower than expected, and the research report use information and data are not updated in time.
