Shanxi Coking (600740) 2018 Annual Report Comments: Acquisitions Improve Better Performance Future Changes Also Look at Coking
The company’s traditional main business is coke and related chemical by-products, and its profitability is weak. The net profit in the past 10 years has been below 100 million yuan.
However, in 2018, it acquired a 49% stake in China Coal Huajin, and its performance increased significantly.
The increase in performance of the acquisition is expected to improve in the first quarter of 2019, but with the high and stable price of coking coal, changes in subsequent company performance will replace the traditional coking sector.
Acquisitions increase investment income, and net profit increased by 15 in 2018.
The company’s operating income / net profit in 2018 were 72.
2.9 billion / 15.
33 ppm (+20 each year.
58% / + 15.
67x), basically consistent with the level of performance forecast, EPS is about 1.
The increase in performance was mainly due to the acquisition of a 49% stake increase in China Coal Huajin11.
150,000 yuan investment income.
Net profit after deduction 12.
94 ppm, non-recurring income is mainly generated by the discount of the acquired equity, which is about 1 in terms of the company’s stock business performance.
The company’s profit distribution plan is 2 yuan (including tax) for every 10 shares, and the dividend rate is about 20%.
Coke sales rose by nearly 6%, and factors such as environmental extreme production led to a decline in coal chemical sales.
In 2018, the company produced coke 300.
66 announced (100% of annual plan completed), sales of 299.
68 initially (at least +5.
Coke formaldehyde / cost is 1777.
88 yuan / ton, previously +17.
71% / + 17.
26%, gross margin increased by 0 in the short term.
The company produces anhydrous tar 25.
83 for the first time, at least -14.
33%; production of carbon black 5.
57 earliest, at least -15.
48%, coal chemical production has not completed the production plan indicators, mainly 都市夜网 due to environmental protection and production restrictions need to adjust the coking time leading to equipment shutdown and maintenance.
In 2019, the company plans to produce 285 inserts of coke, 31 inserts of processed tar, 11 joints of crude benzene, 20 pins of methanol, and 7 of carbon black.
China Coal Huajin is still expected to contribute to this year’s performance increase.
China Coal Huajin’s 2018 net profit was 29.
64 ppm, the net profit per ton of coal is expected to reach about 340 yuan, because the corresponding equity net profit is only included in the investment income after the completion of the acquisition in March 2018, so assuming that Huajin Company’s 2019 profit is stable, the investment income in the first quarter can still increase by about 3Billion or so.
Risk factors: The company’s coking business profits have increased sharply; coal prices have fallen sharply; and the macro economy has exceeded expectations.
Investment suggestion: Considering the latest coal, coke price expectations (the price of coking coal is unchanged, and the price of coke is down by 3%) and all additional equity issues, we lower the company’s 2019/2020 EPS forecast to 0.
04 yuan (previous forecast was 1.
23 yuan), plus EPS forecast 1 for 2021.
The current price is 10.
52 yuan, corresponding to 2019?
2021 P / E11 / 10 / 10x.
Give the company a target price of 14 yuan, corresponding to 2019 P / E15x, and maintain a “Buy” rating.