Events:
The company released its 17-year annual report and 18-year quarterly report, with revenue of 7.643 billion yuan in 17 years, an increase of 6% over the same period last year. Affected by the reduction in management and transportation fees, the company realized a net profit of 395 million yuan, down 22.24% from the same period last year, in line with Shenwan Hongyuan's expectations. 18Q1 realized revenue of 2.897 billion yuan, an increase of 8.84% over the same period last year, and its net profit was 314 million yuan, an increase of 42.61% over the same period last year, slightly exceeding Shenwan Hongyuan's expectations. In the first quarter, the company expects 18H1 to achieve a net profit of 277 million yuan to 378 million yuan, an increase of 10% 50% over the same period last year.
Main points of investment:
"Coal to gas" continued to advance, 17 the whole year and 18Q1 gas sales increased compared with the same period last year. In October 16, Shaanxi Province reduced the gas transmission fee for non-residents by 0.121 yuan per cubic meter, and the terminal gas price dropped somewhat. In addition, Shaanxi Province has vigorously promoted the action of controlling haze with an iron fist since 17 years, subsidizing 1000 yuan per household for "coal to gas" households. The two major measures jointly stimulate downstream demand growth. The company completed gas sales of 5.585 billion cubic meters in 17 years, an increase of 7.2% over the same period last year. 18Q1 gas sales continued. Revenue increased by 8.84% compared with the same period last year.
The reduction of management and transportation fees led to a decline in the company's gross profit margin, a sharp drop in 17-year net profit compared with the same period last year, and 18Q1 performance exceeded expectations. Long-distance pipeline business is the company's main source of profit, the reduction of pipeline fees led to the company's 2017 long-distance pipeline business gross profit margin decreased by 2.43% to 10.35%, the company's overall gross profit margin decreased by 2.15% to 10.24%, resulting in a significant reduction in homecoming net profit. The company's gross profit margin rebounded to 15.88% in the first quarter of 18 years, coupled with the increase in gas sales, the company's performance improved significantly, and the first-quarter net profit increased by 42.60% compared with the same period last year.
The fixed increase has been approved by the Development and Review Commission to raise funds to improve the scale of pipe network coverage. The company's non-public offering plan was approved by the Development and Review Commission of the Securities Regulatory Commission in December 17, proposing a non-public offering of no more than 220 million A-shares, raising 1.26 billion yuan, and is expected to complete the issue in 18 years. Part of the funds raised will be used for natural gas pipeline projects such as Hanan Line and Zhonggui Line, Shangluo to Shangnan, Meixian to Longxian, Shangluo to Luonan, Ankang to Xunyang and so on. The company will add more than 488km of long-distance pipelines and increase its annual gas transmission capacity from 13.5 billion cubic meters to 14.5 billion cubic meters, effectively improving the company's natural gas supply capacity.
Vigorously expand the urban gas market and rapidly expand market share. In 2017, the company opened three new users in Qianyang Qinhua, Longxian Anshang and Luochuan Hongda, and LNG was successfully piloted in Baishui North Mining Community and Apple Inc Science and Technology Industrial Park, which further broadened the company's market share; actively carried out preliminary work for Sichuan-Shaanxi, Shanxi-Shaanxi and Shaanxi-Hubei pipeline projects, reached cooperation intention with Ankang Jiangnan Gas, and carried out market research and M & A preliminary work in Wuqi, Longxian and Fengxian. Signed an iron fist gasification project cooperation framework agreement with eight cities in Guanzhong, completed the market research of boiler coal to gas in 29 barracks in 6 cities of the troops stationed in Shaanxi, and is expected to continue to benefit from the promotion of the policy of "coal to gas".
Earnings forecast and rating: we raised the company's 18-19 homing net profit forecast and added 20-year homing net profit forecast. We expect the company's 18-19-year homing net profit to be 5.31,5.84 and 634 million yuan respectively (the previous 18-19 net profit forecast is 4.3 yuan and 504 million yuan respectively), and the current share price corresponds to 14, 13 and 12 times PE respectively. As the leader of Shaanxi pipe network, the company is expected to continue to benefit from the downstream consumption growth brought by "coal to gas" and the promotion of market-oriented reform of natural gas, and maintain the "overweight" rating.
