Event: on October 19, 2022, the company released its third quarterly report of 2022. In the first three quarters of 2022, the company achieved operating income of 1.839 billion yuan, an increase of 31.98% over the same period last year, a net profit of 459 million yuan, an increase of 99.46%, and a non-return net profit of 442 million yuan, an increase of 95.92% over the same period last year.
22Q3's performance has greatly increased, in line with expectations. 2022Q3, the company achieved operating income of 711 million yuan, an increase of 39.09% over the same period last year, an increase of 16.71% compared with the same period last year; the net profit of returning to the mother was 93 million yuan, an increase of 52.94% over the same period last year, a slight decrease of 0.69%; and the net profit of deducting non-return was 77 million yuan, an increase of 28.19% over the same period last year and a decrease of 17.93%.
Natural gas prices rose in the third quarter, and the peak season is about to aggravate the tension between supply and demand. In the third quarter, due to "Beixi No.1"
After several suspensions and reductions in gas delivery, supply and demand of natural gas in Europe was tight, and gas prices rose rapidly. The futures price of natural gas in 22Q3 was US $7.95 per million British heat, an increase of 84.24% over the same period last year, and an increase of 6.13% month on month. The CIF price of NYMEX in China was 46.55% per million British thermal, an increase of 148.95% over the same period last year and 70.92% over the previous year.
Under this background, the company has achieved higher income because part of the coalbed methane is sold at the market price. After the explosion and leakage of the Northstream pipeline on Sept. 27, the relevant operators said that the repair work would last more than a year, which would lead to a shortage of natural gas in Europe. Although the current EU gas storage rate has reached more than 90%, the IMF estimates show that there will still be a gap between natural gas supply and demand in Europe for the whole year, and after the end of this round of heating, EU gas storage rate will be far lower than the average level of previous years, and the replenishment time may be extended, so that the contradiction between supply and demand will exist for a long time, and prices are expected to rise again after entering the peak season of natural gas demand.
Endogenic epitaxial plus code reserve space. The company has completed well testing in three blocks Heshun Hengling, Wuxiang South and Liulin Shixi, and coalbed methane reserves are expected to be further improved. In addition, in May this year, 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.
The gas supply capacity of the pipeline is increasing. By the first half of 2022, the progress of the replacement pipeline laying project of the west-to-east long-distance gas transmission pipeline through the goaf of the company under construction has reached 96.11%, and the company's pipeline gas supply capacity will be improved after it is put into production; at the same time, the equity succession work of Huaxin Gas to the company is still in progress, and the sales channel is expected to be further expanded.
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 641, 939 and 1.355 million yuan, respectively, and EPS will be 0.66, 0.97 and 1.40 yuan per share, respectively, corresponding to 14 times, 9 times and 6 times of PE on October 19, 2022, respectively, maintaining 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.