\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 989 Ningxia Baofeng Energy Group Co.Ltd(600989) )
Event:
The company released its annual report and achieved a revenue of 23.3 billion yuan, a year-on-year increase of 46.29%; The net profit attributable to the parent company was 7.07 billion yuan, a year-on-year increase of 52.95%; The net cash flow from operating activities was RMB 6.488 billion, a year-on-year increase of 25.16%.
Comments:
Product price increases and all-round cost reductions have driven substantial growth in performance
The annual sales of PE and PP were 738 / 624000 tons respectively, with a total of 1362000 tons, a year-on-year increase of + 3.2%, and the average price (excluding tax) was 7480 yuan / ton, a year-on-year increase of + 13.7%; The coke sales volume was 4.544 million tons, a year-on-year increase of + 2.6%, and the average price (excluding tax) was 1965 yuan / ton, a year-on-year increase of + 69.70%. In addition, the unit consumption of methanol (refined methanol) of olefin plant 2 was 2.852 tons / ton, a year-on-year increase of -0.033 tons / ton; The unit consumption of raw coal in methanol plant 2 was 1.37 tons / ton, with a year-on-year increase of -0.07 tons / ton, which jointly contributed to cost reduction and income increase.
Coal to olefin route has significant advantages under high oil price
By the end of 2021, the production capacity of China’s oil head, coal head and gas head olefin process accounted for 60:25:15. According to the calculation of the company in the annual report, under the oil price and coal price in 2021, the olefin industry costs of oil head, coal head and gas head were 7497, 7207 and 6381 yuan / ton respectively. Coal to olefin is the process route with the most cost advantage. At present, the background of global inflation is superimposed with the stimulation of the conflict between Russia and Ukraine, the oil distribution is at a high level near us $100 / barrel, and the coal to olefin route has significant advantages.
The projects under construction are pushed forward as scheduled, and the growth path of the company is clear
The company has an annual production capacity of 1.2 million tons of olefins and 4 million tons of coke. According to the disclosure of the company’s annual report, 3 million tons of Coke will be added in 2022h1 and 1 million tons of olefin capacity will be added in 2023h1. At the same time, Cecep Solar Energy Co.Ltd(000591) power generation and hydrogen production from electrolytic water are also advancing as scheduled. The Inner Mongolia project is improving the approval procedures, and the company’s growth path is clear.
Profit forecast and rating
We estimate that the company’s revenue from 2022 to 2024 will be 26.8 billion yuan, 34.8 billion yuan and 45.8 billion yuan respectively, the net profit attributable to the parent company will be 8.2 billion yuan, 10.8 billion yuan and 14 billion yuan respectively, the EPS will be 1.11 yuan, 1.47 yuan and 1.90 yuan respectively, and the current PE corresponding to the stock price will be 13X, 10x and 8x respectively. Based on the expectation that the company’s proposed and under construction projects will be promoted on schedule in the next three years, it will be covered for the first time and given a “buy” rating.
Risk tips
The sharp drop in oil prices has compressed the profit space of coal to olefins; The progress of project approval in Inner Mongolia was less than expected.
