Summary of the report:
The net profit of shareholders belonging to listed companies declined in the first half of 2016. In the first half of 2016, the company realized a total of 253000 tons of refined oil distribution and an operating income of 1.3592783 billion yuan. The net profit attributed to shareholders of listed companies was 1.22 million yuan, compared with 1.929 million yuan in the same period in 2015, down 36.77% from the same period last year.
The competition of oil products business is intensified, and the profit is limited. During the reporting period, the domestic refined oil market prices fluctuated after a sharp fall, and the refined oil market continued the market pattern of excess resources and low consumer demand. The price of domestic refined oil is adjusted at any time with the trend of international crude oil price, the expansion of excess refining capacity, the prominent contradiction of excess resources, the continuous decline of refined oil price, the substitution of new energy for refined oil, and the competition of private enterprises. the retail market competition of refined oil products has become fierce, resulting in the lack of profitability of the company.
The business of non-oil products has increased slightly and there is a lot of room for it. The company's annual report mentioned that it would actively carry out non-oil business. In 2015, the company's non-oil business achieved revenue of 68.2629 million yuan, an increase of 16.17% over the same period last year, but the contribution of operating profit was less than 2%. However, in foreign countries, non-oil business accounts for up to 50% of gas station revenue, and the company has huge room for non-oil business growth.
The asset integration of the national reform is expected. The company is a retailer of refined oil products of China Petroleum & Chemical Group. In recent years, China Petroleum & Chemical has acted frequently. It has injected petroleum engineering business into Yizheng chemical fiber (now petrochemical oil service) and petroleum machinery business into Jiangdrill shares (now petrochemical machinery). Therefore, as the listing platform of China Petroleum & Chemical Group, the company has the expectation of asset integration.
It is estimated that the company's net profit in 2016 and 2017 will be 3.84 million yuan and 5.5 million yuan respectively, corresponding to 0.01yuan and 0.01yuan EPS respectively, covering for the first time and given a "overweight" rating.
Risk hints: oil business competition aggravates risks, non-oil business development is not as expected, national reform is not as expected, and so on.