\u3000\u3000 Shanxi Coal International Energy Group Co.Ltd(600546) (600546)
Event: the company issued the announcement of annual performance increase in 2021. The company expects to realize a net profit attributable to the parent company of RMB 4.5 billion ~ 5 billion in 2021, with a year-on-year (retroactive adjustment) increase of 444.1% ~ 504.6%; The net profit deducted from non parent company was RMB 4.58 billion ~ 5.08 billion, an increase of 436.9% ~ 495.6% year-on-year (after retroactive adjustment).
Q4 single quarter profit far exceeded market expectations, with a month on month increase of 202% ~ 257%. According to the calculation of the company’s performance forecast, in Q4 of 2021, the company realized a net profit of 2.75 billion yuan to 3.25 billion yuan, an increase of 1414% ~ 1690% year-on-year and 202% ~ 257% month on month, far exceeding the market expectation. Main reasons: (1) affected by the continuous improvement of the prosperity of the coal industry and the continuous rise of the coal market price, the average price of q5500 in Qinhuangdao in 2021 was 1030 yuan / ton, an increase of 78.5% year-on-year, of which the average price of Q4 in 2021 was 1350 yuan / ton, an increase of 18.2% month on month compared with Q3; (2) The company comprehensively implemented lean management, scientifically controlled costs, moderately released advanced production capacity, ensured energy supply, and greatly optimized asset quality.
The burden of history has been basically digested, and assets have been optimized and light. At the beginning of its establishment, the company was a traditional trading company. Previously, due to the company’s poor risk management of coal trade business, it was difficult for the company to collect the payment, and the risk of bad debts increased significantly. Since 2014, the company has withdrawn a total loss of bad debts of about 8.1 billion yuan. In order to optimize the asset quality, since 2016, the company has strictly controlled the trade risk, reduced the trade scale, made efforts to clean up the problems left over by history, accelerated the disposal of some trading subsidiaries with serious losses, launched the “downsizing plan”, and continuously reduced the burden of subsequent performance.
Under the background of steady growth, the coal price may exceed market expectations, and the valuation needs to be repaired urgently. On the one hand, the supply guarantee policy is expected to gradually withdraw after the year, and the output ceiling basically appears; On the one hand, the previous central economic work conference defined the “political task” centered on economic construction (for the first time in seven years), with clear intention to stabilize (stimulate) growth. The pro cycle will return in the first half of the year, and the value revaluation of traditional industries has not ended. At present, the corresponding static valuation of the company’s performance in 2021 is less than 4 times, which needs to be repaired urgently.
Investment advice. The company has complete coal types and excellent coal quality. It continues to strictly control trade risks, reduce trade coal sales, and significantly improve its profitability. At present, the static valuation is less than 4 times, which is at the lowest level in history and needs to be repaired urgently. We expect that the net profit attributable to the parent company from 2021 to 2023 will be 4.94 billion yuan, 5.08 billion yuan and 5.25 billion yuan respectively, and the EPS will be 2.49 yuan, 2.56 yuan and 2.65 yuan respectively, corresponding to PE only 3.6, 3.5 and 3.4, maintaining the “overweight” rating.
Risk tip: the coal price fell sharply, the bad debt risk broke out, the entry into the photovoltaic industry was blocked, the promotion speed of hit technology was lower than expected, the photovoltaic demand was lower than expected, the technical route was wrong, and the hit profit was lower than expected.
