Model of the Whole Industry Chain of the World's Largest Coal Listed Companies

China Shenhua has many labels on it. It is the largest coal listed company in the world and the second largest thermal power listed company in China.

In the last century, China's coal industry supply showed small and scattered characteristics. At the beginning of its establishment, Shenhua established the concept of integrated development, formed deep-ploughing coal business, and actively expanded the vertical integration of "coal circuit port navigation" in the downstream industries of coal-based industrial chain, such as power, railways, ports, shipping and coal chemical industry. Business model. According to the semi-annual report of 2019, the operating income of Shenhua Coal, Transportation, Power Generation and Coal Chemical Branches accounted for 55%, 31%, 13% and 1%, respectively, according to the calculation of the operating income of each branch before the merger and offset under the accounting standards of Chinese enterprises.

The effective synergy of various industrial sectors has constructed the core competitiveness of China Shenhua. From the point of view of several cycles in history, benefiting from the diversified operation mode of "coal and electricity transportation", the company still has a strong defensive nature in the downward cycle of coal price, and has become a model for the operation of the whole industry chain in China's coal industry.

Resource Advantage

Establishes the leading position of coal

China Shenhua, registered in Beijing in 2004, was solely sponsored by the former Shenhua Group Co., Ltd. China Shenhua H shares (01088.HK) and A shares (601088) were listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange in June 2005 and October 2007, respectively. For the traditional coal industry, coal mine resources are an important indicator to determine the survival and development of enterprises. Now, China Shenhua has developed into China's largest coal production and sales enterprise, with the largest coal reserves. China Shenhua is the largest coal listed company in China and even in the world in terms of sales volume. Coal sales accounted for 35%-40% of the total industry sales, of which domestic sales accounted for about 10% of the national coal consumption. In terms of output, the company's coal output accounts for about 30% of the total output of coal listed enterprises, ranking first in the industry. Li Jun, general manager and investment director of Shenzhen Fuxing Fund Management Co., Ltd. In the first half of 2019, China's Shenhua commodity coal production reached 145 million tons, down 0.3% from the same period last year. In the first half of the year, the company's coal sales reached 217 million tons, of which 130 million tons were sewage coal sales, the same as the same period last year. During the period, the company sold 74.1 million tons to the top five domestic coal customers, accounting for 34.5% of the domestic sales. Among them, the company sells 60.8 million tons of national energy group, accounting for 28.3% of domestic sales. The top five domestic coal customers are mainly power and coal trading companies.

As of June 30, 2019, China Shenhua has 30.13 billion tons of coal resources and 14.78 billion tons of coal recoverable reserves under the Chinese standard, and 8.12 billion tons of coal saleable reserves under the JORC standard.

Today, coal is still China's Shenhua's largest sector, accounting for nearly 60% of revenue. The company mainly produces and sells a series of power coal products, and the sales of sewage coal accounts for more than half of the total sales of commercial coal. Compared with other domestic coal enterprises, China Shenhua has obvious resource advantages. In addition to the large amount of coal, the company has many large mines, the mine development time is late, the company was established for a relatively short period of time, there is no heavy historical burden, the asset-liability ratio is low, the per capita coal production is high, the mine is safe and efficient. Talking about the advantages of Shenhua coal resources in China, Guan Dalian, a futures analyst from Yide, said that for coal listed companies, the size of their recoverable reserves, the length of their recoverable years, the types of resources and the conditions of exploitation are all important indicators affecting the company's value creation ability. In China, Shenhua's resource reserves and exploitable reserves are the largest. At the same time, the company maintains a lower cost in terms of labor costs, depreciation and amortization, and other details. The production cost of self-produced coal is only 1/2 or 1/3 of that of other coal enterprises. Its competitive advantage is self-evident.

Although the market price of coal fluctuates, thanks to the advantages of coal resources and effective cost control management, China Shenhua has a lower production cost per ton of coal compared with other comparable companies, and its performance does not fluctuate significantly with the market. In 2015, when the domestic coal price was at a low level, China Shenhua still achieved a net profit of 16.144 billion yuan for most of the loss performance of Listed Companies in the same industry. During the period of upward coal price from 2016 to 2018, the net profit per ton of coal of the company also increased significantly compared with other companies, and the profit level was better than that of the same industry.

In 2018, Shenhua's total power generation reached 28.532 billion kilowatt-hours and total electricity sales reached 26.759 billion kilowatt-hours, an increase of 8.5% and 8.7% respectively over the same period of last year. In the first half of 2019, China Shenhua achieved 7.99 billion kilowatt-hours of power generation, 7.496 billion kilowatt-hours of total electricity sales and 52.4% of annual operating targets. At the end of the first half of 2019, the total installed capacity of the company was 31029 MW, of which 29 954 MW of coal-fired generating units accounted for 96.5% of the total installed capacity. Guan Dai pointed out that most of the Shenhuabei power plants in China are located near their own coal mines and railways, while most of the southern power plants are located in coastal areas. In this way, the self-produced coal can be transported to the self-owned power plant at a lower cost by virtue of its own railway and shipping advantages, so as to realize the efficient operation of coal-electricity joint venture.

According to the semi-annual report, in the first half of 2019, Shenhua Power Generation Branch of China consumed 30 million tons of Group coal, accounting for 34 million tons of coal consumption in the power generation branch of China.