Event: on October 29, 2020, the company released the first three quarters report that the net profit attributed to the owner of the parent company in the first three quarters was 460 million yuan, down 44.25% from the same period last year, and the operating revenue was 8.976 billion yuan, down 16.89% from the same period last year.
Comment
Profits in the third quarter improved significantly compared with the same period last year: according to the announcement, the company achieved a net profit of 396 million yuan in the third quarter, a sharp increase of 96.93% over the same period last year and an increase of 222.08% compared with the same period last year.
The profit of the main coke industry has rebounded sharply: we believe that the company's performance is mainly due to the impact of price and cost on the profitability of the coking business. according to Wind data, the average price of primary metallurgical coke in Taiyuan was 1707.91 yuan / ton in the third quarter of 2020, down 2.35% from the same period last year and up 7.14% from the second quarter. The average price of Gujiao No. 2 coking coal in the third quarter was 816.25 yuan / ton, down 12.54% from the same period last year and 0.68% from the previous quarter. The widening price gap between coke and coking coal has opened the profit space of the company's coke business.
The newly built coke production capacity is on the ground, and the output is expected to increase. The company's newly built production capacity Huasheng Chemical Project Coke oven has been ignited, indicating that the project will gradually enter the production period from the construction period. After the project is completed, it will achieve an annual production capacity of 3.85 million tons of coke, 300000 tons of ethylene glycol, 155000 tons of LNG, 60,000 tons of sulfuric acid, the first phase of 2000Nm3/h industrial high purity hydrogen, the second phase of 10000Nm3/h industrial high purity hydrogen production capacity. After the Huasheng chemical project is put into production, the company's coke production capacity will reach 7.15 million tons / year, and the equity capacity will reach 7.05 million tons / year, which will contribute to the output increment.
The coke supply continues to be tight, and coke profits are expected to continue to improve in the fourth quarter: on the supply side, the 4.3-meter coke oven production phase-out plan in Shanxi is gradually implemented, coke production is disturbed, and blast furnace production in downstream steel mills remains high and stable. Coke inquiry is more active. In the context of coke production capacity, coke supply is still tight, coke prices are expected to remain high in the later stage.
With the acceleration of fuel cell industrialization, the company's hydrogen energy business is expected to benefit: according to the notice issued by the Ministry of Finance and other five ministries on the demonstration application of fuel cell vehicles, the industrial application of fuel cell vehicles is inclined to the layout of the whole industry chain, the field of medium and heavy commercial vehicles and demonstration urban agglomeration. The company has set up the whole fuel cell industry chain from hydrogen source-refueling station-membrane electrode (Hongji Chuangeng)-stack (Guohong hydrogen energy)-whole vehicle (speeding car), and released heavy truck models at the end of last year. And the company's hydrogen energy industrial park has covered several major economic development areas, and has been supported by the local government. Including Qingdao (Bohai Bay region), Jiaxing (Yangtze River Delta region), Foshan, Guangzhou, Yunfu (Guangdong-Hong Kong-Macau Greater Bay Area and its surrounding areas) and other cities, as well as Jinzhong City, inland Shanxi Province. In the context of policy support, the company's hydrogen energy business is expected to usher in rapid development.
Investment suggestion: the net profit from 2020 to 2022 is estimated to be 2.818 billion yuan respectively. Considering the improvement of the supply and demand pattern of the coke industry and the continuous development of the fuel cell vehicle industry in the future, the company's performance and cash flow are expected to improve continuously and steadily. Give a buy-An investment rating with a 6-month target price of 8.40 yuan.
Risk hints: the proportion of major shareholder pledge is high, major shareholders reduce their holdings, macroeconomic downturn leads to lower-than-expected coke demand, hydrogen energy project construction is not as expected.
