\u3000\u30 China Baoan Group Co.Ltd(000009) 68 Shanxi Blue Flame Holding Company Limited(000968) )
Event: on April 13, 2022, the company disclosed the performance forecast of the first quarter. The company expects to make a profit of 24-300 million yuan in the first quarter of 2022, an increase of 136.70% – 195.88% over the same period of the previous year.
Both volume and price rose, subsidies were confirmed, and performance increased significantly. According to the announcement, there are two main reasons for the great increase in the company’s performance. First, the company focused on the development of its main business, took multiple measures at the same time, deeply tapped the production potential, strengthened market development, and steadily increased the unit price, sales volume and sales revenue of coalbed methane in the first quarter; Second, the CBM subsidies actually received and confirmed by the company in the first quarter increased significantly year-on-year. Due to the uncertainty of the time when the company obtained the CBM subsidy in the year and the uneven amount of CBM subsidy in each quarter, the company actually received and confirmed the CBM subsidy of 1750826 million yuan in the first quarter of this year.
With the triple advantages of resources + technology + channels, the production of coalbed methane is expected to continue. (1) The company is rich in coalbed methane resources, and the construction of gas wells promotes the growth of production: the company’s proven geological reserves of coalbed methane are 20.5 billion cubic meters, with 3305 coalbed gas wells, which are rich in resources; Moreover, with the exploration of new mining areas and the production of Mines under construction, the output is expected to increase rapidly. (2) The company’s CBM mining technology is leading in China: the company’s technical accumulation in CBM theoretical research and practical operation is in the leading position in China. (3) Enhance the pipeline gas supply capacity, improve the utilization rate of coalbed methane and drive the performance growth: with the layout of the company on the coalbed gas pipeline network, the subjective emptying rate of coalbed methane will continue to decline, which will drive the performance growth of the company.
Oil and gas prices rise, and the company’s comprehensive selling price is expected to rise. Affected by strong overseas demand and the repeated situation in Russia and Ukraine, overseas oil and gas prices rose sharply. According to wind data, the average price of 22q1 Brent crude oil increased by 65.26% year-on-year to US $100.87/barrel, and the average price of NYMEX natural gas 22q1 was US $4.57/million BTU, an increase of 67.91% year-on-year. Driven by overseas prices, China’s LNG prices also rose sharply. According to wind data, the LNG price in the location of 22q1 company (Jincheng, Shanxi) rose 73.62% year-on-year. Affected by this, the company’s comprehensive selling price is expected to rise.
Investment suggestion: under the “double carbon” target, it is an effective way for low emission intensity energy to replace high emission intensity energy. As an unconventional natural gas, the carbon emission intensity of coalbed methane is lower than that of coal and oil. As a national backbone enterprise of coalbed methane extraction and utilization, large-scale extraction and utilization of coalbed methane will play an important role in greenhouse gas emission reduction and realizing the “double carbon” target. We estimate that the net profit attributable to the parent company from 2021 to 2023 will be RMB 305 / 687 / 763 million, the corresponding EPS will be 0.32/0.71/0.79 respectively, and the corresponding PE on April 13, 2022 will be 25 times, 11 times and 10 times respectively. Maintain a “recommended” rating.
Risk warning: the risk of slow exploration and mining of new mines; The risk of falling coalbed methane prices; The risk of insufficient policy support.
