\u3000\u3000 Ningxia Baofeng Energy Group Co.Ltd(600989) (600989)
Achievements
On January 12, the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will reach 6.8-7.2 billion yuan in 2021, with a year-on-year increase of 47.10% – 55.75%.
Analysis
The company’s performance has achieved steady growth, and the cost advantage ensures a good profit base. According to the company’s performance forecast, the company’s net profit attributable to the parent company in the fourth quarter was about RMB 1.488-1.882 billion, with a year-on-year increase of 1.2% – 27.9%. Under the pressure of profit in the olefin industry in the fourth quarter, the company’s raw material price of coal to olefin showed significant upward pressure, and the company could still maintain the overall performance, showing a certain upward, highlighting the company’s own concern about production costs The management advantage of product operation, so as to maintain a good profit foundation under the pressure of the overall profit of the industry.
Coke provides a good performance guarantee, and the new capacity is expected to further optimize the existing profit space. China’s coke price remained high in the fourth quarter. According to the northwest coke price index, the average coke price in the fourth quarter increased by about 115 yuan / ton compared with the third quarter, maintaining a significant high. At the same time, due to the company’s self supply in the coking coal field, the raw material cost is relatively stable, which is expected to drive the company’s product profitability to maintain a good state. At the same time, the company’s 3 million T / a coking polygeneration project is about to be put into operation, which will further expand the company’s coke production capacity. With its own raw material advantages and scale advantages, it is expected to significantly improve the profitability of its coke business.
The coal to olefin business is under pressure in the short term and is expected to recover gradually in the later stage, and the performance will continue to be improved through production expansion. In the fourth quarter, the profit of coal to olefin was compressed to a certain extent due to the significant increase of coal price, so the profit of coal to olefin products in the short term formed a certain pressure. However, in the first quarter, the price of raw coal of the company was gradually reduced, and the cost pressure of raw materials was relieved, which is expected to drive the profitability of the existing coal to olefin business to gradually recover. At the same time, Ningdong continued to follow up the capacity construction of coal to olefins in the later stage of the company, and the third phase was still continuously promoted to provide new capacity for the company in the next year. The follow-up Inner Mongolia projects were also gradually promoted, which would bring significant output improvement to the company and drive performance growth. Investment advice
The company has strong competitiveness in the coal to olefin industry chain and is expected to maintain a good profit level when the product price returns to the normal range. The coke business provides a good industrial foundation. It is predicted that the net profit attributable to the parent company from 2021 to 2023 will be 6.897 billion yuan, 8.459 billion yuan and 10.567 billion yuan, corresponding to 18, 15 and 12 times of PE respectively, maintaining the “buy” rating.
Risk tips
Risk that the construction progress of new projects does not meet the expectations; Risk of sharp fluctuation of product price; Risk of sharp fluctuations in raw material prices; Policy changes affect the risk of the company’s new capacity in the future.
