嘉友国际20250302

Summary of the Conference Call for 嘉友国际 Company Overview - 嘉友国际 is involved in the coal business in Mongolia, focusing on trade, storage, and logistics, with a projected coal trading volume of approximately 5.5 million tons in 2024 [3][4]. Key Points and Arguments Coal Business Performance - The decline in coal prices has raised concerns about profitability, but the storage business remains unaffected by price fluctuations, and logistics mid-range freight rates are stable at around 80 RMB/ton, while short-range rates fluctuate around 60 RMB/ton [3]. - In 2023, the trading segment contributed one-third of the company's total coal business profits, accounting for about 20% of total profits [3][4]. - The company has long-term agreements with ETT Mine (6 million tons until the end of 2026) and MMC Mine (two contracts of 1.5 million tons each), ensuring a stable profit margin unless coal prices decline significantly [3][4]. - A rebound in coal prices in Q2 2024 led to strong performance, but concerns about Q4 profits arose due to unsold coal stockpiles as prices fell [3][4]. - The market outlook for coal prices in 2025 is neutral to pessimistic, but logistics and storage businesses are expected to be less affected [3][4]. Future Projections - The trading volume is expected to reach approximately 7 million tons in 2025, a 25% increase, driven by stable demand for high-quality Mongolian coal from China [3][4]. - Despite potential profit margin declines due to price fluctuations, a 25% volume increase could lead to a 20% overall profit growth [3][4]. Impact of African Operations - The ongoing conflict in Eastern Congo is approximately 1,800 kilometers away from 嘉友国际's operations, thus not directly impacting the company [5]. - The southern region of Congo, where 嘉友国际 operates, is relatively safe and benefits from the presence of numerous Chinese mining companies [6]. - The cobalt reserves in Congo are small (4-5% of total exports), meaning that even if cobalt exports are halted, the impact on 嘉友国际's logistics and transportation volume will be minimal [7]. Financial Contributions and Growth - In 2024, the African projects contributed approximately 300 million RMB in after-tax profits, with expectations for a 20% increase in traffic on the Kasai Road project in 2025 [8]. - The expansion of the BHL fleet to 800 vehicles is expected to contribute several million RMB in additional profits, with overall profit growth projected at 30% to 40% [8]. Upcoming Projects - A 17-kilometer road in Zambia and a port project in Tanzania are expected to be operational in the second half of 2025, further driving revenue and profit growth [9]. Market Outlook and Recommendations - Despite short-term concerns about profitability, the annual net profit is expected to exceed 1.65 billion RMB, with a market capitalization of 15.5 billion RMB and a PE ratio of over nine times [10]. - The dividend yield is close to 4%, and the long-term business outlook is positive, suggesting a buy-and-hold strategy in the current market environment [10].