Listed Coal Enterprises Welcome 'Opening Red' in the First Quarter

On the basis of "stable volume and price" in 2018, coal listed companies continued to perform better in the first quarter of 2019. Up to now, 35 listed coal enterprises in the "Coal Mining and Separation" sector have all announced the first quarter of 2019 performance report, and the overall performance data is good, "red fire" has become the key words of the quarter.

According to the report, the total operating income of the coal sector in the first quarter was 250.345 billion yuan, of which nearly 70% of the enterprises achieved a year-on-year growth in operating income; the total net profit exceeded 27 billion yuan, with only two enterprises in Pingzhuang Energy and * ST Continent losing money. Overall, although a small number of enterprises have experienced a decline in performance, the overall improvement exceeded market expectations. Influenced by stable demand and small price rise, many analysts predict that the positive trend is expected to continue in the second quarter and the industry will continue to recover. Overall performance in the first quarter exceeded expectations. Analysis from Open Source Securities shows that, since last year, under the environment of the rising proportion of the Changsha Association, coal prices have maintained stable fluctuations as a whole, and the profit of the coal sector has maintained a modest and stable growth. In the first quarter of 2019, coal prices fluctuated in an interval, the trend of the coal sector continued in 2018, revenue and net profit increased steadily, and the first quarter performance exceeded expectations in an all-round way. It is worth noting that, unlike the phenomenon of "two-level differentiation" which occurred frequently before, all listed coal enterprises have made profits this year except Pingzhuang Energy and ST Continent. Especially Yanzhou coal industry, medium coal energy, Shaanxi coal industry and other large coal enterprises, still firmly occupy the forefront of revenue and net profit indicators. Shenhua, China, ranks first in the double list with revenue of 57 billion yuan and net profit of 12.6 billion yuan.

In terms of growth rate, 24 enterprises achieved year-on-year growth in revenue in the first quarter, of which 6 enterprises such as Meijin Energy, Anyuan Coal and Yanzhou Coal increased by more than 20%; 19 enterprises achieved year-on-year growth in net profit, and Pingdingshan Coal Holdings took the first place with 402.57% growth rate.

"As the leading coking coal in central and southern China, Pingdingshan Coal Co., Ltd. fully benefited from the rising price of coking coal." Fortune Securities analyst Zhou Ce said. In January of this year, the domestic policy of restricting Australian coal imports was launched, which caused the supply of coking coal to be tight, and the price increased accordingly. Pingdingshan Coal Co., Ltd. is the largest coking coal supplier in Pingdingshan, even in the central and southern regions, with obvious location advantages and convenient railway transportation. In the first quarter, the average output price of main coking coal in Pingdingshan area was 1540 CNY/ton, an increase of 3.35% over the same period last year. For every 10 CNY/ton increase in coking coal price, the company's performance will be increased by about 10%. On behalf of this, coking coal has become the most prominent subdivision plate in the first quarter.

Xing Lei, director of the Research Center of Coal Listed Companies of China Coal Economic Research Institute, Central University of Finance and Economics, told reporters that in the first quarter of this year, China's economy continued to grow steadily, ensuring overall stability of energy demand, thus promoting a steady increase in the coal market. "To a certain extent, the performance of bulk energy materials depends on the overall macroeconomic situation, which is also an important prerequisite for the improvement of listed coal enterprises'operation." Under this background, coal price has become the main factor to boost performance. "Coal price and stock price are inseparable. In the first quarter, the average spot price of Qinhuangdao Port fell by 100 CNY/ton compared with the same period last year. Affected by this, people thought that the performance of coal enterprises would decrease by 5%-10%. After the actual results come out, the vast majority of enterprises are still doing well. Meng Xiangwen, an analyst with Shen Wanhongyuan, said that this was mainly due to the stable price of the origin. In the first half of the year, coal prices were high before and after the overall low and off-season was not weak, and the overall price showed a rebound trend. Zhang Feilong, a researcher at the Institute of Easy Coal Research, agrees that output and coal price are two major factors affecting listed coal enterprises. From a quarter perspective, the limited supply of origin, favorable price trend and invisibly "boost" performance growth.

"As one of the main producing areas, Yulin has been unsatisfactory because of the impact of `1.12'Shenmu Lijiagou Coal Mine accident. Although the proportion of approved and resumed work has exceeded 90%, only 67% of the enterprises actually started work. In addition, this year also faces tightening restrictions on coal tickets, enterprises can not start production even more, the overall supply is not as expected. According to official statistics, production fell by 28 million tons in January-March, but as far as we know, it is far more than that, maybe even more than 50 million tons. Zhang Feilong said that although the restrictions are in Yulin, the impact has affected the overall supply and demand, so the price of coal in the main producing areas has risen.

Can the good performance in the first quarter continue? To many analysts, the answer is yes. "We believe that the good momentum of listed coal companies will continue, and there should be no problem with a slight slowdown in performance." Meng Xiangwen said. Zhou Tai, an analyst at Antai Securities, also said that the performance improvement of listed coal companies in the second quarter was highly deterministic. "In May, the overhaul of the power plant is over and the daily consumption is restored. If the resumption of production in Yulin area is still relatively slow, and in April-June, the State Security Supervision Bureau organizes special inspection of production safety, the high pressure of safety supervision will continue, and the supply is expected to continue to be tight. Compared with the low base in the second quarter of 2018, the current coal price is enough to support the performance improvement year-on-year. "

In addition,"the policy of reducing VAT tax rate to 13% has been implemented since April 1. Coal enterprises generally implement the policy of "reducing taxes without lowering prices". That is to say, the price of enterprises without tax increases.