Yankuang Energy Group Company Limited (1171.HK) The supply and demand pattern of thermal coal market may tighten The deployment of overseas mineral resources highlights competitive advantages December 20, 2023 136

PSR Recommendation: ACCUMULATE Status: Maintained
Target Price: HKD16.30

Overview
Yankuang Energy (1171.HK) takes mining, high-end chemical new materials, new energy,
high-end equipment manufacturing, and smart logistics as its leading industries. It is the only
extra-large company in China listed in four places at home and abroad including Shanghai,
Hong Kong, New York, and Australia. The group`s origin coal resources reach 13.7 billion
tons (JORC standard), ranking among the top in the industry. The Group actively leads the
transformation and upgrading of the industry, including maintaining high-quality and
efficient development of the mining industry; accelerating chain extension and expansion
for the high-end chemical new materials industry; actively promoting multiple projects to
accelerate the rapid development of the new energy industry; strengthening and upgrading
the equipment manufacturing industry, and integrating breakthrough intelligent Logistics
industry. The Group`s overseas mineral resources deployment highlights its competitive
advantages. It is one of the most internationalized energy companies in China, which also
greatly highlights the company`s competitive advantages. At the same time, the group has
strong strength and actively promotes scientific and technological research and
development.
Company Performance review
From the first to the third quarter of 2023, the group achieved operating revenue of 135.038
billion yuan (RMB, the same below), a decrease of 34.082 billion yuan YOY, a decrease of
20.15% YOY; the group achieved net profit attributable to shareholders of the listed group of
15.525 billion yuan, a decrease 13.657 billion yuan YOY, a decrease of 46.80% YOY. Basic
earnings per share were 2.08 yuan, a decrease of 47.83% YOY, mainly due to a year-on-year
decrease in the prices of major products such as coal and chemicals. The net cash flow
generated by the group`s operating activities was 19.007 billion yuan, a decrease of 50.05%
YOY. The net amount of financial services such as deposits and loans provided by Yankuang
Group Finance Co., Ltd. (“Yankuang Finance”) to external parties increased by 11.036 billion
yuan YOY. If excluding the influence of Yankuang Finance Division to the cash flow from
operating activities, the group`s net cash flow from operating activities was 18.028 billion
yuan, still a decrease of 30.084 billion yuan YOY which was mainly due to the following two
reasons: 1) Sales of goods and cash for rendering of services received decreased by 26.319
billion yuan YOY; 2) Cash used to purchase goods and receive services increased by 1.650
billion yuan YOY. The group released a profit distribution policy report on June 30, 2023. The
group`s profit distribution plan will increase the cash dividend ratio from 50% to 60%. In
2022, the group distributed annual dividends and special dividends totaling 4.3 yuan per
share. This announcement reflected the group`s commitment to improving shareholder
returns.

About the author

Profile photo of Margaret Li

Margaret Li
Analyst
Research

本科主修市場行銷和英語,並於香港浸會大學獲得經濟學碩士學位。現為輝立証券持牌分析師,主要負責能源和公用事業等板塊的研究。曾在大型銀行、券商和資產管理公司工作,對於期貨和大宗商品衍生品領域擁有銷售、研究分析和市場推廣等工作經驗。 Margaret, a holder of a Bachelor`s degree in Marketing and English and a Master`s degree in Applied Economics from Hong Kong Baptist University, is currently employed as a licensed analyst at Phillip Securities. She specializes in conducting research focusing on the energy and utilities sectors. Prior to her current position, Margaret gained valuable work experience in a large bank, securities firm, and asset management companies. Her expertise lies in sales, research analysis, and marketing within the fields of futures and commodities derivatives.

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