The company is a leading company in LNG trade, focusing on LNG trade and cargo transportation. With the controlling shareholder Nanshan Group holding project Yulong Petrochemical Phase I construction and production, its logistics demand is expected to promote the rapid development of the company's logistics business, forming a synergistic effect.
LNG trade leader, the scale continues to expand. The company takes LNG trade and general cargo transportation as the two main business sectors. In 2021, the company's revenue is 7.08 billion yuan, LNG trade and cargo transportation account for 85% and 14% respectively. 1) LNG trade: the company ranks third in the industry, forming the LNG transport-LNG gas storage peak shaving-LNG filling station operation of the LNG industry chain, its own LNG transport vehicles, close cooperation with upstream and downstream; 2) cargo transport: traditional logistics business, own transport vehicles, including more than 150 general goods transport vehicles, more than 60 liquid alkali transport vehicles, rapid development. In 2021, the company's comprehensive gross profit margin was 3.4%, and the net profit returned to the mother was 99.26 million yuan, with an average annual growth rate of 13% from 2017 to 21.
With the entry of Nanshan Group, the Yulong petrochemical project is expected to bring synergy. In 2020, Nanshan Group acquired control of the company. Nanshan Group's huge industrial layout and strong strength are expected to enhance the company's financial strength and expand the company's business areas. 1) in 2021, the company acquired Yulong Port from Nanshan Group, through this acquisition, the company's logistics business expanded from road transport to port transportation; 2) the first phase of Yulong Petrochemical, the holding project of Nanshan Group, is under construction. Yulong Island project is a major national productivity layout project, committed to building into a "domestic leading, international first-class" high-end petrochemical industry base, is expected to be put into production in 2024. The first phase of the project is planned to have an oil refining capacity of 2000 million tons per year. Hengli Petrochemical, which has a similar scale, is expected to have an operating income of 100 billion and a net profit of 10 billion after it is put into production. With the construction and production of Yulong Petrochemical, the logistics demand generated by it is expected to promote the rapid growth of the company's logistics business and form a synergistic effect.
For the first time, the company was given a "highly recommended-A" rating. We believe that: 1) as a leader in the LNG trade industry, the LNG business is growing steadily, and as the price of LNG stabilizes, the impact of the epidemic fades, and the company expands more upstream long-term suppliers and overseas direct mining methods, there is room for a significant improvement in gross profit margin; 2) with the alleviation of the epidemic, the construction of Yulong Petrochemical Park is expected to grow rapidly. 3) with the commissioning of the port, the port transport demand will be brought during the construction of the Yulong petrochemical project; 4) in the long-term outlook after 2024, after the first phase of Yulong Petrochemical is put into production, the port is expected to meet a substantial increase in the demand for oil transportation.
We estimate that the company's net return profit for 2022-24 is 1.4 million yuan, respectively. Based on our earnings forecast, the company's current share price corresponds to 62.3 + 36.6 + 22.2 times 2022-24. Cover the company for the first time and give it a "highly recommended-A" rating.
Risk hints: macroeconomic fluctuation risk; energy price fluctuation risk; Yulong petrochemical project construction progress is not as expected; production safety risk.
