The company announced its 19-year performance KuaiBao, with a net profit of 557 million yuan, down 17.86% from the same period last year. At the same time, it also released a 20-year Q1 performance forecast, with an estimated net profit of about 92-100 million yuan, down 10.88% and 26.79% from the same period last year.
Comments: in 2019, the demand for gas well construction business decreased, and the engineering business volume and revenue decreased compared with the same period last year. According to the 18-year annual report, coalbed methane sales, gas well construction and gas control services accounted for 51%, 36% and 12%, respectively. In 2019, coalbed methane sales, sales revenue and profits increased steadily, but the gas well construction business was affected by the decline in demand, engineering revenue and profits declined, which had a direct impact on the performance of listed companies. In 19 years, the homing net profit fell by 17.86%.
The financial subsidy policy of coalbed methane has changed, and the income is confirmed by the principle of caution. In June 19, the Ministry of Finance issued a supplementary notice on the interim measures for the Administration of Special funds for Renewable Energy Development. The document mentions that the subsidy standard for the special funds for the development of renewable energy to support the exploitation and utilization of coalbed methane, shale gas and tight gas in 2018 is 0.3 yuan / cubic meter. Starting from 2019, subsidies will no longer be provided according to the quota standard, and in accordance with the principle of more and more compensation, cascade rewards and subsidies shall be given to those who exceed the exploitation utilization of the previous year, and those that do not reach the utilization of the previous year shall be deducted according to the degree of substandard, and at the same time, the excess coefficient shall be converted to the increment of unconventional natural gas produced in the heating season, reflecting the increase in winter. " From January 1 to December 5, 2019, the company cumulatively confirmed that the government subsidy was 279 million and actually received 179 million. As a result of the above policy changes, the company's annual report recognizes earnings in accordance with the principle of prudence.
Coalbed methane sales increased by 10% in the first quarter compared with the same period last year, and the current earnings did not recognize subsidies. This year, Q1's coalbed methane sales and revenue increased by more than 10% compared with the same period last year, but the return net profit decreased by 10% compared with the same period last year, mainly for two reasons: first, the standard of central financial subsidy for coalbed methane exploitation and utilization has not yet been determined. The company did not recognize the subsidy as the current income in the first quarter (confirmed at 0.3 yuan per cubic meter in the same period last year); second, the gas control business of coalbed methane in some main mining areas was suspended.
Investment suggestion: wait for the later performance growth to resume, maintain the "buy" rating according to the gas group reorganization and integration implementation plan issued by Shanxi SASAC, the gas group will take coalbed methane as the core in the future, gradually build the whole industry chain of the upper, middle and lower reaches of the coalbed methane (gas) industry, and strive to form a new production capacity of 30-5 billion cubic meters per year within 3-5 years. In 2020, the scale of coalbed methane extraction will reach 4.3 billion cubic meters. As the core coalbed methane assets in the gas group, the company has obvious first-mover advantages and relatively large potential increment, which is expected to benefit from the establishment of the gas group and accelerate its development.
Due to the impact of the epidemic, the company lowered its profit forecast. It is estimated that the company's 21-year return net profit of 732 and 958 million yuan (original values are 835 and 958 million), EPS is 0.76 and 0.86 yuan, corresponding to PE11 and 9.65 times. The company continues to promote the production of new blocks, looking forward to further growth and maintaining the "buy" rating.
Risk tips: engineering business continues to decrease, fast progress in the new area is slow, gas prices do not meet expectations, subsidies are reduced or cancelled.