Event: in 2019, the company achieved operating income of 1.887 billion yuan, down 19.13% from the same period last year; net profit returned to its mother was 557 million yuan, down 17.86% from the same period last year; and the weighted average ROE decreased 5.83pct to 13.56% year on year, paying a cash dividend of 0.5 yuan per 10 shares. 20Q1 achieved operating income of 372 million yuan, down 8.55% from the same period last year, while net profit from home was 100 million yuan, down 20.79% from the same period last year.
Increase in gross profit margin of the main business-structural optimization drives the overall gross profit margin to increase 3.52pct. In 2019, the company's overall gross profit margin increased to 41.83%, mainly due to the increase in the gross profit margin of coalbed methane sales and gas well construction business, and the increase in the proportion of coalbed methane sales with high gross margin. From a sub-sector point of view, 1) the revenue from coalbed methane sales reached 1.336 billion yuan, an increase of 13.05% over the same period last year, and the gross profit margin increased to 45.97% from the same period last year. 2) the revenue from the gas well construction project reached 248 million yuan, a decrease of 70.58% from the same period last year, and the gross profit margin increased to 50.99% from the same period last year; the revenue from coal mine gas control was 279 million yuan, down 1.13% from the same period last year, and the gross profit margin was reduced by 0.43pct to 16.34%.
The sales volume of coalbed methane increased by 13.68%, and the production-marketing ratio increased by 5.77pct to 52.70%. The company actively promoted the increase of reserves and production. In 2019, the output of coalbed methane was 1.482 billion cubic meters, an increase of 1.23 percent over the same period last year, accounting for 25.05 percent of the national total. The utilization of coalbed methane was 1.138 billion cubic meters, a slight decrease of 1.04 percent over the same period last year, accounting for 21.05 percent of the national total. The sales volume of coalbed methane was 781 million cubic meters, an increase of 13.68 percent over the same period last year, and the ratio of production and marketing increased by 5.77pct to 52.70 percent.
During this period, the expense rate increased 3.78pct. In 2019, the company's expenses increased by 0.34% year-on-year to 367 million yuan, and the expense rate increased by 3.78pct to 19.46%. Among them, due to the increase in coalbed methane sales during the reporting period, the corresponding operating costs increased by 37.92%; the rates of sales, management, R & D and financial expenses increased by 0.58pct, 1.99pct, 0.22pct, and 1.00pct to 1.40%, 8.45%, 2.69% and 6.92%, respectively.
By strengthening the payback, the net cash flow of business activities increased by 24.71% compared with the same period last year. In 2019, the net cash flow of the company's operating activities was 863 million yuan, an increase of 24.71% over the same period last year, mainly due to the strengthening of sales payback during the reporting period and the recovery of unsettled income at the end of last year; the net cash flow of investment activities was-161 million yuan, a decrease of 170.4% over the same period last year; and the net cash flow of fund-raising activities was-422 million yuan, an increase of 51.58% over the same period last year.
The new block project is progressing smoothly, relying on the group to give full play to the advantages of integration and coordination. The exploration of Wuxiang South, Liulin Shixi, Heshun Hengling and Heshun Mafang East five new blocks is progressing smoothly. A total of 203wells have been drilled, 68 have been fractured and 40 have been put into operation, of which the average daily gas production in Liulin Shixi block is about 65000 cubic meters. And achieve network sales. The smooth implementation of the above blocks will help the company to increase reserves and production and enhance the ability of sustainable development. In addition, as the core coalbed methane assets of Shanxi Gas Group, the company is expected to rapidly develop coalbed methane mining business and give full play to the advantages of integration with the help of the whole industry chain resources in the upper, middle and lower reaches of the group.
Profit forecast and investment rating: according to the operation disclosed in the company's 19 annual report, we expect the company's EPS to be 0.71,0.82,0.96 yuan respectively from 2020 to 2022, corresponding to 11, 10 and 9 times PE, maintaining a "buy" rating.
Risk hint: the progress of the project is not as expected, the sales volume of coalbed methane is not as expected, and the price of coalbed methane is falling.