Event: on August 16, 2022, the company released its semi-annual report for 2022. In the first half of 2022, the company achieved operating income of 1.128 billion yuan, an increase of 27.86% over the same period last year, a net profit of 366 million yuan, an increase of 116.22% over the same period last year, and a net profit of 365 million yuan, an increase of 120.31% over the same period last year.
22Q2's revenue is the highest in a single quarter in the past three years. 2022Q2, the company achieved operating income of 609 million yuan, an increase of 35.49% over the same period last year and 17.25% month-on-month growth. The single-quarter revenue was the highest in the past three years; the net profit of returning home was 94 million yuan, up 38.39% from the same period last year, down 65.47% from the previous month, mainly due to a significant reduction in Q2 compared with Q1 government subsidies.
Benefit from rising gas prices, coalbed methane profitability increased significantly. Affected by the conflict between Russia and Ukraine, the tension in global natural gas supply has intensified. While international natural gas prices have risen, domestic LNG market prices have simultaneously risen to a new high in nearly five years. In the first half of 2022, the average price of the domestic LNG market was 6853 yuan per ton, an increase of 71.81 percent over the same period last year. The company effectively controlled the cost, and the gross profit margin of 2022H1 reached 42.54%, an increase of 7.93pct over the same period last year.
The plan to increase reserves continues to move forward. According to the company announcement, the planned production capacity of the company and the three blocks Shunhengling, Wuxiang South and Liulin Shixi are 300 million cubic meters / year, 200 million cubic meters / year and 100 million cubic meters / year respectively. So far, the company has completed well testing in three blocks, and coalbed methane reserves are expected to be further increased. In addition, the company and Hebei Huayan Oil under Petrochina Company Limited jointly funded the establishment of Shanxi Huayan Coalbed methane Co., Ltd., with a 90% stake. At present, Huayan Company is actively promoting the development of coalbed methane resources in well 25 of Mabidong block. speed up the pace of increasing reserves and production.
Asset injection is expected to expand the scale of the main business. In order to solve the competition in the same industry, Shanxi Energy Group and Shanxi Gas Group have respectively entrusted 81% and 19% of their shares in Shanxi coalbed methane to the company. at present, the company is gradually improving its operating performance and standard level. the improvement of follow-up benefits is expected to start mergers and acquisitions, so as to expand the company's main business scale and further strengthen the company's scale advantage in coalbed methane resources in Shanxi.
Pipeline construction is nearing completion, Huaxin Gas may further help the company to broaden its sales channels. By the first half of 2022, the progress of the replacement pipeline laying project of the west-to-east long-distance gas transmission pipeline passing through the goaf has reached 96.11%. At the same time, Huaxin Gas's equity succession work to the company is still under way, and the strong investment in transportation pipelines will help the company form a complete chain from coalbed methane exploration and development, gas well operation to transportation and sales, thus broadening the company's sales channels.
Investment suggestion: the company distributes coalbed methane upstream, middle and downstream integrated industrial chain, builds coalbed methane production base, matches with pipeline transportation, opens up stable user markets such as urban gas and industrial gas, and has resources and industrial advantages in Shanxi. We estimate that the company's homing net profit from 2022 to 2024 will be 693, 770, 000, 898 million, 0.72, 0.80, 0.93 and 15, 13 and 11 times, respectively, respectively, and maintain the "recommended" rating.
Risk hints: the risk of coalbed methane price decline; the risk of gas well exploration and production not up to expectations; the risk of insufficient policy support.