China Shenhua (601088) In-depth Report: Coal, Electricity and Transportation Integrated Operation Steady Underestimation of High Dividends Highlights Investment Value

China Shenhua (601088) In-depth Report: Coal, Electricity and Transportation Integrated Operation Steady Underestimation of High Dividends Highlights Investment Value

Summary of the report: The company has abundant coal resources, and the second largest domestic listed thermal power company ① The company is the world’s largest listed coal company, ranking 5th in Platts Energy Information’s “Top 250 Global Energy Companies 2018” at the end of 2018, ChinaNo. 1 in the company.

China’s standard coal holdings 303.

0 billion tons, recoverable reserves of 149.

5 billion tons, JORC standard coal saleable reserves of 82.

600 million tons.

Approved capacity is about 3.

3.9 billion tons, equity capacity 2.

8.5 billion tons, master the five major mining areas in Shanxi, Shaanxi and Mongolia, have the right to speak alternatives, and the cost of self-produced coal is significantly lower than peers.

② The second largest listed thermal power company in China, second only to Huaneng International.

The controlled and operated generator assembly has a capacity of 61849 MW and generated 285.3 billion kWh in 2018.

③ The largest transportation company in the coal sector, operates the railway transportation network of the coal bases of “Jinxi, Northern Shaanxi, and Mengnan”, and the “Shenshuo-Shuohuang Line” West-Coal East Transport Corridor, a total of 10 railway lines (oneThe construction mileage is about 2155 kilometers, second only to China Railway Group and three ports.

④ It owns a coal-to-carbide project in Baotou Coal Chemical Industry with an annual output of about 60 tons.

The integrated operation of coal and electricity transportation has a stable profit and is resistant to cyclical fluctuations. The coal revenue accounts for nearly 60%. Before the combined offset in 2018, the operating income of the coal / transport / power generation business was 413 respectively.



200 million, accounting for 55% / 27% / 17% respectively, 90% of the business of the transportation segment is to serve internal coal transportation, the profit level is highly related to coal sales, so the coal and transportation business is procyclical.

The coal-electricity joint venture mode can reduce the pressure on coal sales, reduce the impact of coal price fluctuations on the company’s profits, and dampen periodic fluctuations.

Reconstruction continues, and the remaining growth space for the Harwusu Mine still has to be resolved. The average output in January 2018H is about 170 tons, and it is expected to start to recover to 280 tons in the middle of the year.

There is still room for growth in the utilization hours of 402 MW thermal power assets that have been put into operation in early January 2018 to early 2019.

The capacity of the Huangda Railway and the Shenshuo Railway is expanding, and it is expected that the freight turnover 杭州桑拿 capacity will further increase around 2020.

In addition, for unresolved competition in the industry, the original Shenhua Group promised to reduce and inject 14 assets of the company. In addition to the acquisition of 3 assets in 2015, the rest will start the acquisition before June 30. The approved coal assets will have a production capacity of about 100 million tons.

At the end of January 2019, the company and Guodian Power each completed a transaction to form a joint venture with their thermal power assets, and part of the company’s power generation assets will be reduced to long-term investment.

Investment proposal On April 8th, according to the 2018 dividend plan, the dividend rate reached 4.

5%; PE (ttm) 9.

3, the highest level of the highest round cycle, located at the lowest position of the CS coal plate; PB (lf) 1.

2, which is also the highest level 无锡桑拿网 of the cycle, and is lower than the plate average of 2.

The company’s profit has risen steadily, and it is expected that 2019-2021 EPS will be 2 respectively.



12, corresponding to PE respectively 9.

9X / 9.

8X / 9.

6X, give recommendation level.

Risks suggest that coal prices have fallen sharply, production has fallen short of expectations, and restructuring progress has fallen short of expectations.