\u3000\u3 Bohai Water Industry Co.Ltd(000605) 090 Jiangxi Jovo Energy Co.Ltd(605090) )
Performance review
On April 12, the company released its 2021 annual report and the first quarterly report of 2022. In 2021, the company realized an operating revenue of 18.48 billion yuan, a year-on-year increase of + 107%, and a net profit attributable to the parent company of 620 million yuan, a year-on-year decrease of 19%. In 2022, Q1 achieved an operating revenue of 7.02 billion yuan, a year-on-year increase of + 126%, and a net profit attributable to the parent company of 390 million yuan, a year-on-year increase of + 41%. Q1 performance slightly exceeded expectations.
Business analysis
The company’s profit improved significantly in the first quarter of 2022, and the LNG business remained optimistic in the second half of the year. The company’s long-term contract pricing adopts the N-2 strategy. Due to the sharp rise of JKM and other indexes in October 2021, the purchase price of Q4 long-term contract is at a high level, while the spot price of LNG in China decreases and the interest margin decreases. The company’s gross profit margin is damaged in 2021, narrowing to 6.5%, a year-on-year decrease of 56%. In contrast, the net profit attributable to the parent company in the first quarter was 390 million yuan, a year-on-year increase of + 41%, mainly due to the lower JKM index in January, which was good for the long-term purchase price of the company in March, while China’s spot market was at a high level in March and the company’s interest margin increased. The current surge in overseas LNG prices is an extreme situation under the influence of multiple factors. We expect that the LNG price will return to stability in the future, the company’s profits will return to the right track, and we are optimistic about the company’s annual performance.
The company plans to acquire the onshore LNG Company Huayou Zhonglan, and the completed production capacity of phase II will reach Shanghai Pudong Development Bank Co.Ltd(600000) tons / year. The company announced that it had signed the transaction contract on partial equity transfer of Sichuan Huayou Zhonglan Energy Co., Ltd. and planned to acquire 28% equity of Huayou Zhonglan held by LanJin energy at a transfer price of 230 million yuan. Huayou Zhonglan is a Sichuan LNG Company. After the completion of phase II construction, the production capacity will reach Shanghai Pudong Development Bank Co.Ltd(600000) tons / year. At present, it is the largest single natural gas liquefaction plant in Southwest China, with cost advantages.
The company actively promotes cooperation with juzhengyuan and locates the middle and upper reaches of hydrogen energy industry. On the one hand, obtain the main and by-products of hydrogen through the cooperation of giant industrial companies; On the other hand, according to the market demand, actively arrange the hydrogen production by natural gas reforming and electrolytic water, so as to realize the industrial closed loop of hydrogen production, filling and sales. The company has the advantages of cost and location, and is expected to become the leader of hydrogen production in Guangdong Province in the future.
Profit adjustment and investment suggestions
Based on our latest judgment on the company’s LNG / LPG cost, selling price and sales volume, we fine tune the company’s net profit attributable to the parent company from 2022 to 2023 to 1.03/1.53 billion yuan, and predict that the net profit in 2024 will be 1.63 billion yuan, corresponding to EPS of 2.32/3.45/3.68 yuan respectively. Maintain the “buy” rating and maintain the target price of 48.80 yuan / share, corresponding to 21 times PE in 2022.
Risk tips
The risk of lifting the ban on restricted shares, the risk of too high LNG purchase price, the risk of acquisition less than expected, the risk of project production less than expected, and the risk of RMB exchange rate fluctuation.
