China Shenhua net profit 37.1 billion debt reduction 20 billion 12 year dividend

China Shenhua, the world's largest coal listed company, saw steady growth in operating performance. In the first three quarters of this year, Shenhua achieved an operating revenue of 177849 million yuan, a year-on-year decrease of 8.36%. The net profit (attributable to shareholders of the listed parent company, the same below) did not decrease, but increased by 5.13%, reaching 37.088 billion yuan. Since this year, affected by factors such as land acquisition and regional security rectification, the coal price has been reduced. Under such a severe situation, why does Shenhua realize the steady growth of net profit?

Shenhua was founded in November 2004. Since its establishment, the company has established the concept of integrated development and made the coal based industry chain bigger and stronger. At the same time, through group level restructuring with Guodian group, the company started the coal power restructuring, and both sides jointly set up a new company, breaking the dilemma of coal power mutual tear. Since then, coal power has been stable and synergistic, effectively resisting market volatility risk. In the first three quarters of this year, China Shenhua's net investment income was 2.402 billion yuan, mainly including the investment income and financial product income confirmed by the above-mentioned joint venture company's asset delivery. In addition, as of the end of September this year, the total debt of the company was 51.354 billion yuan, down 21.73 billion yuan from 73.084 billion yuan in the same period last year. As a result, the company's financial expenses decreased by 1.270 billion yuan. China Shenhua has also taken some measures to reduce costs and increase efficiency. In the first three quarters, the company's management expenses decreased by 784 million yuan year on year. In the past 12 years of listing, although the operating performance has fluctuated, Shenhua has never been in a loss. The year with the lowest profit is 2016, with 16.144 billion yuan. In the past 12 years, the company has achieved a total net profit of RMB 453.633 billion.

China Shenhua, which has strong profitability, is also very generous in dividends. Since its listing, the company has achieved annual dividend, with a cumulative dividend of 209.04 billion yuan and a dividend rate of 46.08%. This dividend amount is 3.14 times of its total equity financing, ranking 175th among the 3705 listed companies of a shares. After the decline of net profit last year, Shenhua successfully realized the change from decrease to increase. According to the third quarter report, in the first nine months of this year, Shenhua achieved an operating revenue of 177849 million yuan, a year-on-year decrease of 16.235 billion yuan, or 8.36%; net profit of 37.088 billion yuan, an increase of 1.810 billion yuan, or 5.13%, compared with 35.278 billion yuan in the same period of last year. In the fourth quarter of last year, Shenhua's operating revenue was RMB 70.017 billion, up 5.75% year on year, and its net profit was RMB 8.589 billion, down 8.51% year on year. In the first, second and third quarters of this year, the operating revenue of the company was 57.011 billion yuan, 59.354 billion yuan and 61.484 billion yuan respectively. Although it was growing quarter by quarter, it was declining year-on-year, with a drop of 9.48%, 7.84% and 7.83% respectively.

The corresponding net profit was 12.587 billion yuan, 11.656 billion yuan and 12.845 billion yuan, with a year-on-year growth of 8.20%, 2.75% and 4.42% respectively. According to the above data, China Shenhua's net profit ended the decline in the fourth quarter of last year, and continued to grow from the first quarter of this year. As a matter of fact, since this year, the market's expectation for Shenhua is that both operating revenue and net profit have declined significantly. According to the information disclosed by China Shenhua, affected by multiple factors such as land acquisition, regional security rectification and insufficient outsourcing coal sources, in the first half of this year, energy investment group achieved 217 million tons of coal sales, down 3.6% from 225 million tons in the first half of 2018. Meanwhile, the average selling price of coal is 420 CNY/ton (excluding tax), down 2.8% from 432 CNY/ton in the first half of last year. The reduction in volume and price made Shenhua's business performance exceed the market expectation. Among peers, in the first three quarters of this year, Zhengzhou coal power fell into a loss, and the net profit of Jizhong energy fell by 13%. The reporter of Changjiang business daily found that China Shenhua's net profit rose against the trend mainly due to two factors, namely, investment income and cost reduction and efficiency increase.

In the second half of 2017, Shenhua Group and Guodian group jointly reorganized, and started the joint reorganization of coal and electricity, which cracked the "coal power top bull" pattern for many years. Subsequently, China Shenhua and Guodian group jointly set up the company. In the first three quarters of this year, Shenhua obtained 2.402 billion yuan of investment income due to the delivery of assets of the joint venture company and investment income. In addition, in the first three quarters of this year, the company's sales expenses, management expenses and financial expenses were 470 million yuan, 13.281 billion yuan and 1.510 billion yuan, respectively, decreasing by 20 million yuan, 784 million yuan and 1.270 billion yuan compared with the same period of last year, totaling 2.074 billion yuan. Of course, Shenhua has established a vertical integrated operation mode of "coal circuit harbor" in the downstream industries of coal-based industrial chain, such as electric power, railway, port, shipping, coal chemical industry, etc., which has also effectively suppressed the adverse impact of coal price cycle. With the completion of coal power joint restructuring, Shenhua has a stronger ability to resist the cyclical risk of coal.

In fact, China Shenhua has always had a good business performance. It has been 15 years since Shenhua was founded, and it entered the A-share market on October 9, 2007. In the past 12 years of listing, although it has experienced a cold winter of coal, many coal management enterprises once fell into losses, but China Shenhua has not only never lost money, and its net profit has exceeded tens of billions of yuan for a long time. The lowest period in history is 2016, with a minimum net profit of 16.144 billion yuan. According to statistics of Changjiang business daily, in the past 12 years of listing, Shenhua has achieved a net profit of 453.633 billion yuan, with an average annual net profit of 37.803 billion yuan. China Shenhua has stable finance and sufficient cash flow. As of the end of September this year, the company's asset liability ratio was 26.0