Author: Yulin Zizhou Date: January 4, 2023
Foreword: 2022 is a year of great profit for coal companies, and the profits of major coal companies have all hit new highs. It has been 20 months since the coal price hike began in May 2021. During these 20 months, the profit per ton of Niu Mine was double that of previous years. But in the field of coal investment, there are some debates about the impact of the coal price cycle on net profit. There are arguments such as coal price uncertainty, net profit uncertainty, and coal prices falling to 2015 coal prices.
In my opinion, aren’t all companies competing for volume and price? Not only coal companies, but also other companies. For enterprises, they should still use observation and data to resolve disputes, and stop wasting their lives with superficial thinking. I took out my own “Taizu Changquan” – the calculation of volume, price, tax loss, capital and profit, and simply predicted the net profits of the four major coal companies, including Shenhua, Shaanxi Coal, Yankuang, and China Coal, in the first quarter of 2023.
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First, let me talk about the framework of my discussion: 1. Coal price comparison over the same period; 2. Coal production comparison over the same period; 3. Net profit deduction.
1. Coal price comparison over the same period
thermal coal
I am more familiar with the Yulin thermal coal price trend, and I use my own record of the Yulin thermal coal price instead of the port coal price.
Coal prices and current prices in the first quarter of 2022 are as follows:
In January, January, February, and March, the price of 5,900 kilocalorie lump coal for civilian use in a coal washing plant in Shenmu is as follows, 900,900,935 yuan.
The current price is 1080 yuan.
2. The starting price of Shaanxi Coal Industry is 38 yuan, 1100 yuan in January and 990 yuan in February-March.
The current price is 1220 yuan.
3. The price limit for 5,500 kcal mixed coal in Shaanxi, Inner Mongolia, and Shanxi is 700 yuan.
Current limit price: 780 yuan
In April, February and March, the purchase price of Shendong Shenyou No. 2 origin is 890 yuan to 1120 yuan.
The current price is 1022 yuan.
5. From January to March, the global Newcastle index ranges from 200-400 US dollars, and the API5 index ranges from 150-290 US dollars
The current price of the global Newcastle index is 399 US dollars, and the API5 index is 133 US dollars.
coking coal
The price of Shaanxi Huangling gas clean coal in 2022 is as follows:
2,000 yuan in January, 1,700 yuan in February, and 2,050 yuan in March.
The current price is 2000 yuan.
2. Comparison of coal production and structure over the same period
1. Coal sales structure is compared by coal type
Shaanxi Coal Industry lump coal accounted for about 20%, coking coal accounted for about 8%, and long-term contracts accounted for about 60%.
In terms of equity, metallurgical coal of China Shenhua Chemical Co., Ltd. accounts for about 17%, thermal coal long-term agreement accounts for about 80%, and the rest is spot.
Generally speaking, Yankuang Energy accounts for about 30% of high-quality chemical and metallurgical coal, about 30% of long-term thermal coal, and the rest is thermal coal market coal.
For China Coal Energy, it can be roughly seen that the long-term agreement on thermal coal accounts for about 50%, and coking coal accounts for about 20%. The rest is chemical coal for self-use or steam coal for external sales.
2. Comparison of coal production over the same period
In 2022, the year-on-year growth of commercial coal production of the four major listed coal companies is ranked as follows. 1. Shaanxi Coal Industry 11%, 2. China Coal Energy 6.7%. 3. China Shenhua 3.1%. 4. Yankuang Energy -1.6%. Among them, the first three companies use the year-on-year data from January to November. Yankuang Energy uses the data of the first three quarters.
According to my observations, in 2023, the actual equity output of coal enterprises will most likely achieve positive year-on-year growth.
1. The base of Shaanxi Coal Industry in the first quarter of 2022 is low, and there is no problem with a year-on-year increase of 10%.
2. China Shenhua increased its 30% stake in Jinjie Energy, corresponding to an increase of 5.4 million tons of high-quality thermal coal, a year-on-year increase of 2%, no problem.
3. China Coal Energy will increase if there is a sea, and there is no problem with a year-on-year increase of 7%-10%.
4. The output of Yankuang Energy’s Yingpanhao and Shilawusu mines increased, and the overall output increased by about 3% year-on-year.
3. Profit calculation
Based on the current coal price of Yulin origin, the price of clean coal in Shaanxi Province, and the price of Australian coal, a version of the forecasted profit is given.
1. In Shaanxi Coal Industry, the market coal price is 80 yuan higher than that of the same period, the price of thermal coal is 50 yuan lower than that of the same period, the price of lump coal is 200 yuan higher than that of the same period, and the price of coking coal is flat year-on-year. The quarterly profit should be between 8 billion and 8.5 billion.
2. China Shenhua, chemical and metallurgical coal was flat year-on-year, the long-term coal price was 8 yuan higher than the same period last year, Jinjie Energy increased its net profit by about 400 million, and the electricity price was flat. China Shenhua’s net profit is about 19 billion.
3. Yankuang Energy, due to the year-on-year increase in the production of Yingpanhao and Shilawusu, realized a slight decrease in coal prices. However, because Yancoal Australia’s settlement cycle is 2-3 months late, the overall net profit has the largest year-on-year increase among the four major coal companies, with a net profit of about 8.5-9 billion.
4. For China Coal Energy, due to the sea, the increase in equity production by about 2 million tons, the reduction of interest-bearing debts and other factors, the net profit increased by about 700 million, and the net profit was about 7.3-7.8 billion.
4. Special Tips
1. There are very large uncertainties in both coal prices and production. The outlook in early January is a forward-looking forecast, and the probability of profit forecast errors is extremely high.
2. Originality is not easy. This article contains a large amount of self-collected data and calculations, welcome to reward. At the same time, I would like to say that friends who hold coal shares below 200,000 yuan are not recommended to give rewards.
$Shaanxi Coal Industry(SH601225)$ $China Shenhua(SH601088)$ $Yankuang Energy(SH600188)$
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