China Shenhua (601088): The third quarter results were slightly better than expected, mainly due to the decline in commercial coal and the adverse growth
Event overview: In the first three quarters of 2019, the company achieved operating income of 1778.
500 million, at least -8.
4%; net profit attributable to mother 370.
88 trillion, +5 for ten years.
1%; net profit after deduction is 353.
6.9 billion a year -1.
0%; basic income 1.
865 yuan, +5 ten years ago.
In the third quarter of 2019, the company’s single-quarter operating income was 614.
800 million, at least -7.
8%; net profit attributable to mother in a single quarter was 128.
4.5 billion, previously +4.
The company’s main business slightly exceeded expectations: coal purity exceeded expectations, and electricity sales were slightly lower than expected.
(1) The output of the coal segment was slightly lower than expected, the scale exceeded expectations, and the cost was in line with expectations: in the first three quarters of 2019, it replaced the former segment with revenue of USD 145.5 billion and changed it to -3.
5%, accounting for 65% of the previous total revenue (Q3 single quarter 518 trillion, +2 in the same period.
2%, accounting for 67%), replacing the former division’s gross profit of 416 ‰ and changing it to -3.
1%, accounting for 56% of the total gross profit before recovery (Q1 single quarter 14.6 billion US dollars, changed to +3.
6%, accounting for 58%), mainly due to rising coal prices in Q3.
In the first three quarters of 2019, coal production was 2.
1.4 billion tons, before -2.
7%, sales 3.
3.2 billion tons, before -2.
4%; purity of 426 yuan per ton of coal, ten years -1.
1%; self-produced ton of coal costs 109 yuan / ton, many years -1.
Q3 single season, coal production is 0.
69 billion tons, previously -7.
4%, according to the company’s main operating data announcement from August to September 2019, the decline in output is mainly due to the impact of the production of the Shengli No. 1 open-pit mine by the progress of the land acquisition of the mining site, and the output of Wanli No. 1 mine due to the progress of the production certificate renewal., The output of Bultai Mine declined due to changes in mining geological conditions; single quarter sales 1.
1.5 billion tons, previously -0.
1%, the amount of purchased coal increased; 437 yuan / ton per ton of coal in a single season, each time +2.
1%, Bohai Rim Index +1.
5%, CCTD index -0.
6%, CCI index -7.
At 4%, Shenhua Coal ‘s bargaining power has been expanded to reduce adverse growth; self-produced coal ton coal mining cost is 105 yuan / ton (-1) per season.
2%), mainly due to at least reductions in unused security costs.
(2) The electricity sales in the power sector were slightly lower than expected, and electricity prices and costs were basically in line with expectations: in the first three quarters of 2019, offsetting the revenue of the former segment by 38.3 billion U.S. dollars, changed to -41.3%, accounting for 17% of total revenue before recovery (Q3 121 trillion, so -50.
7%, accounting for 16%), replacing the former division’s gross profit of 10 billion US dollars, to -29.
6%, accounting for 14% of the total gross profit before recovery (Q3 33 trillion single quarter, converted to -43.
7%, accounting for 13%), mainly due to the decline in electricity sales.
In the first three quarters of 2019, the company’s power generation / sales amount was 1,167 / 109.3 billion kWh (ten-45% /-45%, comparable caliber interval -4% /-4%).The joint venture company will release the meter at the end of January 2019; the average electricity price is 0.
333 yuan / degree (previously +5.
6%); unit electricity sales cost is 0.
257 yuan / degree (in the past +1.
In Q3 single season, the company’s power generation / sales amount was 36.8 / 344 billion kWh (-54% /-54% per hour, comparable caliber -13% /-13% per second).Season electricity price is 0.
338 yuan / kWh, the electricity cost per quarter is 0.
255 yuan / degree.
(3) The volume, price, and cost of the transportation segment basically met expectations: in the first three quarters of 2019, it replaced the previous segment with revenue of $ 37.1 billion, each time +0.
7%, accounting for 16% of the previous total revenue (Q3 single quarter of $ 12.4 billion, -0 per year.
1%, accounting for 16%), replacing the previous segment’s gross profit of 21.6 billion US dollars, to +3.
1%, accounting for 29% of the total gross profit before recovery (Q3 single-season USD 7 billion, at this time -2.
4%, accounting for 28%), mainly due to the slight decrease in gross profit per ton-km of Q3 railway traffic.
In the first three quarters of 2019, its own railway turnover was 214.7 billion ton-kilometres (once +1.
6%), ton-km income of 0.
141 yuan (+1 year).
9%), the cost per ton-km (estimated value) is 0.
054 yuan (in the past +2.
6%); the amount of coal in the own port1.
7.4 billion tons (previously -1.
6%); expected freight volume is 0.
8.4 billion tons (previously +6.
In Q3 single season, its own railway turnover was 71.8 billion ton kilometers (at least -1.
4%), ton-km income of 0.
140 yuan (+1 per year).
3%), the cost per ton-km (estimated value) is 0.
056 yuan (+5 for the whole year.
0%); the amount of coal in the own port is 0.
61 billion tons (previously -1.
6%); expected freight volume is 0.
2.9 billion tons (previously +8.
The net profit attributable to mothers slightly exceeded expectations: Q3 single quarter gross profit was -7 per year.
4%, net profit attributable to mother +4.
4%, mainly due to the annual decline in period expenses / income / minority shareholders’ equity and investment income (non-recurring) growth. (1) The investment income is mainly non-recurring: Of the 2.4 billion investment income in the first three quarters of 2019, 1.1 billion euros were the non-recurring profits and losses formed when the joint venture was established in Q1, 5.
6 million investment income from gains and losses from changes in fair value and disposal of transactional financial assets, only 5 in Q3.
(2) Expenses in Q3 period remained at a 青岛夜网 stable low level: In Q3, the total expenses for three seasons (including R & D) were 54 ppm, -10% each time, and the cost per ton of coal was 47.
4 yuan / ton.
(3) The third quarter revenue growth rate / minority shareholders’ equity ratio slightly exceeded expectations: in the third quarter, revenue decreased by 17% (18Q3: 21%), or the transportation sector profit increased due to increased yields;In the third quarter, minority shareholders’ equity accounted for 14% of net profit (19% in 18Q3).
(4) The third quarter’s single-quarter free cash flow rebounded month-on-month: Calculate the company’s free cash flow based on “net cash flow from operating activities-cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets.”12.5 billion yuan in a single quarter, a 南宁桑拿 quarter-on-quarter improvement of US $ 5.1 billion (mainly due to fluctuations in receivables), an improvement of US $ 45.8 billion in the first three quarters, and a decrease of US $ 55.3 billion a year ago, mainly due to operationsThe decline in net cash inflows from activities and the increase in net cash from fundraising activities (asset-liability ratio decreased from 33% at the end of 18Q3 to 26% at the end of 19Q3, a decrease of 7 substitutions) are still reasonable.
Investment suggestion: raise the profit forecast for 2019/20 to 443/426 trillion net profit, EPS 2.
14 yuan, maintaining the profit forecast for 2021, and 26.
Target price of 08 yuan / share, re-buy rating.
Due to the slightly higher-than-expected coal price, we have raised our profit forecast and expect the company’s net profit attributable to its mothers to be US $ 44.3 / 426 / 42.8 billion in 2019-21.Yuan), +0 each year.
8% / + 0.
5%; raised EPS forecast for 2019-21 to 2.
15 yuan (the original EPS forecast for 2019-21 in the previous report was 2).
15 yuan), according to the company’s closing price of 18 on October 28, 2019.
26 yuan / share, corresponding to PE is 8/9/8 times.
Since the original target price is 12 times PE based on 2021 performance (expected forecast unchanged), it is maintained at 26.
The target price of 08 yuan and “Buy” rating remain unchanged.
Risk reminders: Macroeconomic fluctuations exceed expectations, changes in energy import policies, non-coal energy developments exceed expectations, and the impact of group integration on corporate governance.