Summary:
Shaanxi Natural Gas is currently the only natural gas pipeline operator in Shaanxi Province. It is responsible for the planning, construction, operation and management of long-distance gas pipelines throughout the province. The largest shareholder of the company is Shaanxi Gas Group. In the future, Shaanxi Gas Group will continue to develop upstream natural gas extraction and comprehensive downstream natural gas utilization projects to increase the volume of natural gas transmission from Shaanxi as an intermediate pipeline transportation business. The company's future performance is guaranteed.
Shaanxi Province, where the company is located, is the main producer of natural gas in China, with projected natural gas reserves of 6-8 trillion cubic meters. Shaanxi Province is one of the main natural gas resource areas for the Changqing Oilfield. The company has a long and good cooperative relationship with CNPC Changqing Oilfield. In the first quarter of 2018, the company achieved an 8.84% year-on-year increase in operating income and a 42.60% increase in net profit, mainly due to the increase in the company's sales volume and changes in the gas sales structure.
Shaanxi Province, where the company is located, is also one of the places where natural gas resources are concentrated in China. Therefore, the transportation cost of natural gas is lower than in other provinces and cities, and the price is also relatively low. The company's natural gas prices are highly competitive with other energy prices, and the company's natural gas market space in Shaanxi Province has further increased.
Profit forecast: We forecast the company. We forecast the company's revenue for 2018, 2019, and 2020 to be 81.01, 85.47, and 9.017 billion yuan respectively, and net profit of 4.84 and 5.05 billion yuan respectively. 524 million yuan, and EPS was 0.42, 0.44, and 0.46 yuan respectively, giving an investment rating of “increase in holdings”
Risk analysis: 1) Policy risk; 2) The company's gas source is concentrated in the Changqing gas field. If a major accident occurs in a single gas field, it will have an impact on the company's business, and demand from downstream users will also limit the company's gas supply; 3) Market competition; 4) The company's business is concentrated in Shaanxi Province, making it difficult to expand outreach.