Summary of the report:
Performance summary: in the first half of 2017, the company achieved operating income of 1.54756 billion yuan, an increase of 75.44% over the same period last year; in the first half of 2017, the company achieved a net profit of 30.13 million yuan belonging to shareholders, an increase of 7.14% over the same period last year.
Business expansion leads to revenue growth, while traditional business is a drag on profit growth. The rapid expansion of the company's LNG business during the reporting period led to a substantial increase in operating income in line with our expectations, and the profit margin of the road transport business decreased due to the impact of the load restriction policy, resulting in a relatively slow profit growth rate as a whole. We believe that in the future, with the increase in the proportion of LNG distribution business and the optimization of transportation structure, profit growth is expected to pick up gradually.
LNG distribution is growing rapidly and is expected to become a leader in the industry. In the first half of 2017, the revenue of LNG and other gas wholesale and retail business reached 1.3226269 billion yuan, an increase of 98.55% over the same period last year, of which trade sales were about 400000 tons and income was about 1.2 billion yuan, an increase of about 93% and 101% respectively over the same period last year. LNG clean and environmental protection, easy to transport, high security, China's LNG consumption accounts for only 1/4 of the world average, broad space for growth, driven by low gas prices and environmental protection, industry people expect China's LNG demand will expand rapidly; the company's LNG receiving terminal business in China Petroleum & Chemical Corp Beihai, Tianjin is a deterministic source of growth, backed by China Petroleum & Chemical Corp, the company is expected to become the leader in LNG logistics distribution industry under continuous expansion.
Increase the size of dangerous goods transport to boost the transport business. In the transport business, the company from 2015 to optimize bulk cargo transport capacity, increase the capacity of dangerous chemicals, with dangerous goods transport qualifications and rich industry experience, while dangerous chemicals transport industry threshold is higher, the company is expected to give play to competitive advantage.
Investment suggestion: the company's LNG distribution business is expected to rely on China Petroleum & Chemical Corp to achieve remote expansion and become the domestic LNG distribution leader. It is estimated that the EPS from 2017 to 2019 will be 0.63 yuan, 0.89 yuan and 1.37 yuan respectively.
Risk hint: oil price fall risk, cooperation with China Petroleum & Chemical Corp is not as expected; cargo transportation, dangerous chemicals safety accident risk
