China Shenhua's Q4 net profit attributable to shareholders decreased by 24% quarter-on-quarter, and the cash dividend payout ratio rose to 76.5% | Financial Report Insights

Against the backdrop of changes in the global energy landscape, China Shenhua continues to maintain a stable operational performance. Despite a significant decline in coal and electricity prices, the company's financial revenue and net profit for 2024 only experienced a slight decrease.

On Friday evening, China Shenhua announced its 2024 performance report. Key points are as follows:

Revenue Performance: Achieved operating revenue of 338.375 billion yuan in 2024, a year-on-year decrease of 1.4%; Q4 revenue reached 84.476 billion yuan;

Profit Situation: Annual net profit attributable to shareholders was 58.671 billion yuan, a slight year-on-year decrease of 1.7%; Q4 net profit attributable to shareholders was 12.597 billion yuan, a significant quarter-on-quarter decrease of 24%, with a non-recurring net profit of 14.091 billion yuan;

Main Business Performance: Commodity coal production was 327.1 million tons (up 0.8% year-on-year), coal sales volume was 459.3 million tons (up 2.1% year-on-year), and electricity generation was 22.321 billion kWh (up 5.2% year-on-year), all exceeding annual targets.

Cash Dividend: Proposed to distribute a final dividend of 2.26 yuan per share (tax included) for the year 2024, totaling 44.903 billion yuan, accounting for 76.5% of net profit attributable to shareholders, with the dividend payout ratio continuing to increase.

Asset Status: Total assets at the end of the period were 658.068 billion yuan, a year-on-year increase of 4.4%; net assets attributable to shareholders were 426.866 billion yuan, a year-on-year increase of 4.4%; the debt-to-asset ratio was 23.4%, a year-on-year decrease of 0.7 percentage points.

Shareholder Returns: Distributed a final dividend of 2.26 yuan per share (tax included) for the year 2024, totaling 44.903 billion yuan based on the current share capital, accounting for 76.5% of net profit attributable to shareholders under Chinese accounting standards;

Guidance Situation: Plans for 2025 include commodity coal production of 335 million tons (up 2.4% year-on-year), coal sales volume of 466 million tons (up 1.4% year-on-year), and electricity generation of 22.71 billion kWh (up 1.7% year-on-year).

Slight Decline Amidst Performance Resilience

In 2024, China Shenhua's operating revenue reached 338.375 billion yuan, a slight year-on-year decrease of 1.4%, with net profit attributable to shareholders at 58.671 billion yuan, down 1.7% year-on-year.

This decline is mainly attributed to the decrease in coal sales prices and electricity sales prices. It is noteworthy that the company's main operational indicators exceeded annual targets, with commodity coal production, coal sales volume, and electricity generation completing 103.5%, 105.5%, and 103.2% of their respective targets, demonstrating the company's outstanding capabilities in supply chain management and production coordination.

From a quarterly perspective, the company's performance showed some volatility. The net profit attributable to shareholders was highest in the third quarter at 16.570 billion yuan, while it dropped to 12.597 billion yuan in the fourth quarter, reflecting seasonal fluctuations in the energy market and the impact of factors such as cost settlement and asset impairment testing.

Robust Asset-Liability Structure and Strong Cash Flow

As of the end of 2024, China Shenhua's total assets reached 658.068 billion yuan, a year-on-year increase of 4.4%; net assets attributable to shareholders were 426.866 billion yuan, a year-on-year increase of 4.4%. The company continues to maintain low debt operations, with a debt-to-asset ratio of only 23.4%, a decrease of 0.7 percentage points from the end of the previous year More notably, the total debt-to-capital ratio is only 6.7%, a year-on-year decrease of 0.6 percentage points, which is at a low level in the industry.

In terms of cash flow, the company's performance is particularly impressive. The net cash flow generated from operating activities reached CNY 93.348 billion, a year-on-year increase of 4.1%, exceeding the net profit level, reflecting the company's outstanding cash generation capability.

The net cash flow from operating activities per share reached CNY 4.70, an increase from CNY 4.51 in the previous year.

Generous Shareholder Returns

The company's board of directors proposed a final dividend of CNY 2.26 per share (before tax) for the year 2024. Based on the current share capital, the total dividend amounts to CNY 44.903 billion, accounting for 76.5% of the net profit attributable to shareholders under Chinese accounting standards, an increase from 75.2% in 2023 and 72.8% in 2022.

This high dividend payout ratio not only reflects the company's commitment to returning value to shareholders but also demonstrates the management's confidence in the company's long-term cash generation ability.

Outlook for 2025: Steady Progress

Looking ahead to 2025, China Shenhua has set production and sales targets slightly higher than those for 2024: coal production of 334.8 million tons (up 2.4% year-on-year), coal sales of 465.9 million tons (up 1.4% year-on-year), and electricity generation of 227.1 billion kilowatt-hours (up 1.7% year-on-year). However, the company expects operating revenue to decline to CNY 320 billion, a year-on-year decrease of 5.4%, which may be based on the judgment of continued pressure on coal prices.

It is noteworthy that the company expects the unit production cost of self-produced coal to increase by about 6% year-on-year in 2025, while this cost is expected to remain stable in 2024. This indicates that the company will face certain pressures in cost control, possibly due to increased safety production investments, changes in resource endowments, and heightened environmental protection requirements