Event: on January 21, 2022, the company issued an annual performance forecast for 2021, which is expected to achieve a net profit of RMB 2.6-330 million in 2021, compared with the same period last year, with a year-on-year increase of RMB 164.27%. The net profit of non-return is RMB2.4-310 million, which is + 199.46% RMB287.31% over the same period last year; and basic earnings per share is RMB0.270.34 per share, an increase of RMB1.141.21 per share compared with the same period last year.
Under the background of higher-than-expected performance and rising gas prices, the company's performance is flexible. According to estimates, the company achieved a net profit of 0.3-100 million yuan in the fourth quarter of 2021, with an average of 65 million yuan, slightly higher than the 2021Q3 level and maintained a steady growth. On the whole, the company's performance in 2021 exceeded our previous forecasts and Wande consistent expectations. The reason for the substantial increase in the company's performance compared with 2020 is mainly due to the simultaneous increase in volume and price of the main coalbed methane business:
In terms of sales volume, coalbed methane sales reached 1.099 billion cubic meters in 2021, an increase of 20.5% over the same period last year; in terms of price, the company's coalbed methane sales increased in unit price due to the impact of domestic LNG rise in 2021.
We believe that the company focuses on coalbed methane sales, and its performance is flexible against the backdrop of rising gas prices that began in early 2021, and is expected to continue to grow while gas prices are expected to remain medium-to-high in 2022.
With the triple advantages of resources, technology and channels, the production of coalbed methane is expected to continue. (1) the company is rich in coalbed methane resources, and gas well construction promotes production growth: the company has proven coalbed methane reserves of 20.5 billion cubic meters, has 3305 coalbed methane wells, and is rich in resources; and with the exploration of new mining areas and the commissioning of mines under construction, production is expected to increase rapidly. (2) the company leads the domestic coalbed methane production technology: the company's technology accumulation in the theoretical research and practical operation of coalbed methane is in the leading position in the country. (3) enhance the gas supply capacity of the pipeline, improve the utilization rate of coalbed methane, and promote the growth of performance: with the layout of the company in the coal seam pipe network, the subjective emptying rate of coalbed methane will continue to decline, which will lead to the growth of the company's performance.
Looking ahead to 2022, profitability is expected to continue to improve. In terms of price, under the policy of "double carbon" and "coal to gas", domestic natural gas demand increases steadily, and with the promotion of market-oriented reform of natural gas price, the company's coalbed methane price (especially LNG) is expected to increase steadily. In terms of output, the company focuses on the development of the main industry, with increasing reserves and production as the core. By the end of 2020, the projects under construction are mainly coalbed gas well projects, with a total planned investment of 8.299 billion yuan and a cumulative investment of 3.857 billion yuan. with the company's coalbed gas well project under construction in 2021-2022 has been completed and put into production, the company's coalbed methane production is expected to increase rapidly. In terms of utilization, with the growth of downstream demand and the construction of pipe network transportation, the subjective emptying rate is expected to continue to decline.
Investment suggestion: considering that the sales volume of coalbed methane in the company's 2021 performance forecast is higher than previously expected and combined with the current natural gas price trend, we increase the company's 2021-2023 net return profit to 284x97max, the PE corresponding to the closing price on January 21, 2022 is twice as much as 29-27-26, considering that the company's business is expected to continue to achieve a volume-price rise in the context of rising natural gas demand, and the company's moat is generous. Maintain the recommended rating.
Risk hints: the risk of slow exploration and mining of new mines; the risk of falling coalbed methane prices; the risk of insufficient policy support.