Coal stocks in Q1 cooled down, China Shenhua's revenue slightly increased, with profits declining by 14% year-on-year | Financial Report Insights

The coal sector experienced a cold first quarter, with the "coal-electricity leader" China Shenhua also seeing a 14% decline in profit.

On Friday, China Shenhua released its first quarter financial report for 2024. The report showed that China Shenhua achieved revenue of 87.647 billion yuan, a slight increase of 0.7% year-on-year. The net profit attributable to the company's owners was 17.76 billion yuan, a decrease of 14.1% year-on-year, mainly due to the impact of falling coal prices. Operating cash flow was 28.553 billion yuan, a slight decrease year-on-year.

In terms of key operating indicators, in the first quarter of 2024, China Shenhua's commercial coal production was 813 million tons, an increase of 1.5% year-on-year; coal sales volume was 1.171 billion tons, a significant increase of 8.8% year-on-year. Due to market supply and demand changes, the average selling price of commercial coal decreased by 7.7% year-on-year to 573 yuan/ton, leading to a slight decline in coal business profit.

Benefiting from the recovery of domestic electricity demand, China Shenhua's power generation business achieved growth against the trend. The total electricity sales volume was 52.16 billion kilowatt-hours, an increase of 7.0% year-on-year. The average utilization hours of coal-fired units reached 1254 hours, a historical high for the same period. The gross profit margin of the power generation business reached 16.9%, an increase of 1.1 percentage points year-on-year. The company actively promoted new energy projects, with the installed capacity of photovoltaic power generation increasing to 482 megawatts.

With a low asset-liability ratio, as of the end of March, China Shenhua's total assets were 656.569 billion yuan, with equity attributable to the company's owners at 429.119 billion yuan. The asset-liability ratio was 22.6%, indicating a relatively stable financial condition. In terms of expenses, the company's financial expenses decreased year-on-year.

The coal sector is known for high dividends, with China Shenhua reporting a net profit attributable to shareholders of the company of 59.694 billion yuan last year. The company distributed 75% of the net profit as dividends, with a total dividend amount of 44.9 billion yuan.

While many companies in the industry saw a decline in performance in the first quarter of this year, some analysts pointed out that coal demand in the power industry gradually weakened in the first quarter, especially after the heating season ended. Daily coal consumption in the power industry significantly decreased, and long-term coal transportation remained stable, keeping power plant coal inventories at high levels