Coal companies fall into the doldrums

The first batch of coal-fired power companies recently released three quarterly reports. In the third quarter, thermal coal and coking coal market prices ushered in the largest adjustment in the last five years. Some coal mines suffered losses. The single-quarter performance of coal-listed companies fell, but thermal power business performance rose.

Coal companies encounter cold spells

From January to September of this year, Orchid Branch created a total profit of 1.5 billion yuan; Pingzhuang Energy made a profit of 481 million yuan; ST Jinrui earned a profit of 2.9411 million yuan; coal gasification losses of 228 million yuan.

The third-quarter performance of coal companies dropped significantly. Orchid Branch's net profit was 408 million yuan, 25% lower than the average of the previous two quarters. Pingzhuang Energy's net profit for the third quarter was 71,824,400 yuan, a year-on-year drop of 69% and a 64% drop from the previous two quarters. Pingzhuang Energy explained that from July to September 2012, actual coal sales were 2,236,700 tons, down 24.81% year-on-year; average coal sales price was 272.57 yuan/ton, down 7.55% year-on-year. Coal gasification suffered a loss of 178 million yuan in the third quarter of this year, a year-on-year drop of 397.63%. In the first half of the year, it lost a total of 50 million yuan. ST Jinrui incurred a loss of RMB 1.861 million in the third quarter.

The decline in the performance of coal companies is generally directly related to the decline in coal prices. The period from June to the end of September is the fastest time for thermal coal to decline in recent years, with a drop of nearly 25%. Companies with higher coal market share are more affected. The price of coking coal has also been significantly reduced by more than 20% since July and it has not stabilized until the beginning of October.

The shrinking sales also affected the profits of coal companies, the most obvious being Pingzhuang Energy. In the third quarter, Pingzhuang Energy's coal price decline was far lower than the market coal price cut, but due to coal sales decline of about 1/4, resulting in a significant decline in performance.

Among the above-mentioned enterprises, coal gasification is the most serious loss-making enterprise. The main reason is that coke accounts for a relatively high proportion of company income. According to the information, the company's existing coke production capacity is 1.7 million tons/year. The coke industry is fiercely competitive, and the price decline in the third quarter exceeded the decline in raw materials. However, coal gasification has closed down the coking plant this year and will be converted to pure coking coal companies in the short term.

Thermal power companies usher in a turnaround

The decline in coal prices will benefit thermal power companies, but different companies will benefit differently.

Guodian Power, Baoxin Energy, Jiantou Energy, and *ST Electronics Co., Ltd. released the first three quarterly performance reports. Guodian Power earned 2.347 billion yuan in the first three quarters, including 1.146 billion yuan in the third quarter. Bao new energy net profit of 113 million yuan in the third quarter, the first three quarters total net profit of 270 million yuan, an increase of 152% and 72% respectively. Construction investment in the third quarter net profit of 31,461,300 yuan, the first three quarters of total net profit of 8,905,200 yuan, an increase of 278.79% and 422.3% respectively.

The increase in the third quarter results was mainly due to the increase in electricity prices. In April and December last year, the company's on-grid tariff was raised twice, with adjustments of 1.49 points and 2.83 points, respectively. At the same time, the investment income of the participating companies has improved their performance. As for the decline in coal prices, due to the company's major contract coal accounts for the bulk of the market, and the market coal is mainly purchased from pits, and the decline in coal prices in Shanxi pits is only about 10%, so the impact is not as obvious as the coastal power companies.

However, in the third quarter, the power generation output of thermal power plants was also more negative. Only under the combined power of the decline in coal prices and the increase in electricity prices, most of the thermal power companies' performance turned positive. *ST Electronics Co., Ltd. reported a loss of 112 million yuan in the first three quarters of this year. In the third quarter, it made a profit of 259 million yuan. In the third quarter, the company's transfer and shut-down group capacity contributed non-operating income of 260 million yuan. Thermal power companies have been cold for the capital market because of their poor profitability. The improvement in profitability provided a better market environment for power companies and restructuring.