Peace viewpoint:
From Shandong to the national LNG distribution leader: the company is the LNG distribution leader in Shandong Province, and the LNG sold by the company accounts for more than 20% of Shandong LNG consumption. LNG sales account for more than 80% of the company's total operating income, which is the company's main source of income. As the company moved to the whole country according to Shandong and actively laid out the markets in Beijing, Tianjin, Hebei, southwest, Jiangsu, Zhejiang and Anhui, the company's business income increased significantly. From January to June 2017, the company achieved business income of 1.55 billion yuan, an increase of 75.44% over the same period last year.
With the conversion of coal to gas in full swing, the company ushered in a great opportunity: the next five years will be a golden period for the rapid development of China's natural gas industry. We believe that: (1) there is still room for domestic natural gas prices to decline; (2) China's natural gas consumption will increase rapidly in the next five years; and (3) the proportion of imported gas, especially imported LNG, in national natural gas consumption will still increase. Shandong area is one of the key areas for the implementation of the coal-to-gas project in China since the beginning of this year, and the company will directly benefit as the leader of LNG distribution in Shandong area.
Increase 450 million to expand LNG transport capacity to meet new opportunities: in January 2017, the company issued a fixed increase plan to raise no more than 450 million yuan, of which 315 million yuan was used for LNG logistics project to expand the company's LNG transport capacity. The project is implemented by Shandong optimized Logistics, a wholly-owned subsidiary. According to the plan, after the completion of the project, it will contribute 23.99 million yuan in net profit to the company every year.
Investment suggestion: since 2017, coal to gas has been strongly promoted throughout the country, and natural gas consumption has increased significantly. As the largest LNG distributor in Shandong, the company has directly benefited. It is estimated that the EPS of the company from 2017 to 2019 is 0.59,0.95,1.47 yuan respectively, and the price-to-earnings ratio of the previous share price is 46 times, 29 times and 19 times respectively. Cover for the first time and give a "recommended" rating.
Risk hint: the number of entrants to the industry is gradually increasing, and the pressure of competition is increasing.
