On 2021-11-01, Yang Lihong and Hu Bo of Huajin Securities Co., Ltd. studied Yanzhou Coal and issued a research report entitled "performance improvement in the third quarter, Coal and Coal Chemical Industry are the main growth points". The current share price is 22.83 yuan.

Yanzhou Coal Industry (600188)
Main points of investment
Event: on October 30, 2021, the company released three quarterly reports. Of this total, the company's revenue in the first three quarters reached 105.036 billion yuan, down 36.22% from the same period last year (adjusted); gross profit reached 27.41%, an increase of 17.13% over the same period last year; and net profit reached 11.532 billion yuan, an increase of 65.23% over the same period last year (adjusted). The net interest rate reached 10.98%, an increase of 7.29 percentage points over the same period last year.
Comments:
The performance of the third quarter improved from the previous quarter: revenue in the third quarter reached 39.656 billion yuan, down 19.34% from the same period last year, an increase of 15.53% over the same period last year; and the net profit returned to the mother reached 5.49 billion yuan, an increase of 229.20% over the same period last year and 44.84% from the same period last year. The decline in revenue from the same period last year was mainly due to the adjustment of the financial report after the acquisition, and the increase in profits was mainly contributed by the coal and coal chemical business.
The profit of the coal business increased greatly over the same period last year, contributing to the main performance: the company's coal sales revenue in the first three quarters reached 53.176 billion yuan, up 0.24% from the same period last year; the cost of sales reached 30.775 billion yuan, down 16.05% from the same period last year; and gross profit reached 22.401 billion yuan, up 36.65% from the same period last year. The company's commercial coal output in the first three quarters was 77.773 million tons, down 14.07% from the same period last year; commercial coal sales were 77.192 million tons, down 31.91% from the same period last year. In the third quarter, commercial coal output was 26.804 million tons, down 15.29% from the same period last year, while commercial coal sales were 26.279 million tons, down 33.85% from the same period last year. The reason for the decrease in the company's commercial coal production and sales compared with the same period last year is, on the one hand, affected by safety and environmental protection factors, and on the other hand, because Inner Mongolia Mining (Group) Co., Ltd. acquired 57.75% stake in Ordos Yingpan trench Coal Co., Ltd., and the operating data of Yingpangou Coal Mine in the first three quarters of 2021 are included in the Inner Mongolia Mining table. The company's coal sales price reached 688.88 yuan / ton in the first three quarters, an increase of 47.22% over the same period last year.
The performance of the coal chemical business has improved significantly, and the flexibility is expected: in the first three quarters of the company, the revenue of the coal chemical business was 15.533 billion yuan, an increase of 117.92% over the same period last year; the cost was 9.762 billion yuan, an increase of 53.66% over the same period last year; and the gross profit was 5.771 billion yuan, an increase of 644.65%. The main sources of income and profits are acetic acid and ethyl acetate from Lunan Chemical Industry and crude liquid wax from energy sources in the future. The flexibility of chemical business performance can be released in the future.
The power business is affected by the cost side, and profits decline: in the first three quarters, the company's electricity generation reached 5.393 billion kilowatt hours, an increase of 40.81 percent over the same period last year; electricity sales reached 4.372 billion kilowatt hours, an increase of 71.48 percent over the same period last year. In the third quarter, the company's electricity generation reached 1.79 billion kWh, an increase of 26.79% over the same period last year; electricity sales reached 1.36 billion kWh, an increase of 37.67% over the same period last year. In the first three quarters, the sales revenue of the electric power business reached 1.392 billion yuan, an increase of 57.47 percent over the same period last year; the cost of sales reached 1.356 billion yuan, an increase of 101.19 percent over the same period last year; gross profit reached 36 million yuan, down 82.86 percent from the same period last year; and the gross profit margin of the company's power business in the first three quarters was 2.59 percent, down 21.17 percent from the same period last year.
Investment advice: solid coal fundamentals, future performance is expected to continue to release. Coal chemical business continues to improve, and is expected to become an important growth point of the company in the future. At the same time, according to the company's annual report for 2020, the company promised to pay a dividend of not less than 50% and not less than 0.5 yuan per share in 2020-2024. We maintain a buy-B rating for the company. Taking into account the sharp rise in coal prices in the third quarter and the adjustment of the caliber of the statement after the acquisition of assets, the profit forecast is revised upwards, and the estimated return net profit for 2021-2023 is 178.68x208.59 / 22.88 billion yuan, corresponding to 3.67pm 4.28pm 4.69 yuan per share, respectively.
Risk hint: the risk that the coal price falls more than expected; the environmental protection supervision risk; the exchange risk; the risk that the project production schedule is not as expected.

A total of 11 agencies have rated the stock in the last 90 days, including 9 buy ratings, 1 overweight rating and 1 neutral rating; the average institutional target price in the past 90 days is 29.13; according to the Securities Star valuation analysis tool, Yanzhou Coal (600188) good company has a rating of 3.5star, a good price rating of 3.5star and a comprehensive valuation rating of 3.5star.