Introduction to this report:
The company's 23-year performance was basically in line with expectations. Retail price spreads remained stable. It focused on shareholder returns and launched a three-year dividend payment plan. The 24-year target guided growth, and the value-added business grew rapidly.
Summary:
Maintain the “Overweight” rating and maintain the target price of HK$8.45. The company focuses on the main natural gas sales business, and relies on CNPC to stabilize gas sources. We lowered the 2024-2025 EPS to 0.74 yuan/0.78 yuan (originally 0.83/0.87 yuan), and added a forecast of 0.85 yuan for 2026. Referring to comparable companies, considering the company's resource advantages and growth, the company was given 10.5 times PE in 2024, maintaining a target price of HK$8.45, maintaining a “gain” rating.
The retail gas price spread was in line with expectations, and LNG terminal load rebounded markedly from month to month. In 2023, the company achieved revenue of 177.35 billion yuan, +3.1% year-on-year, and net profit of 5.68 billion yuan to mother, +8.7% year-on-year.
Among them, natural gas sales achieved revenue of 1406.0 billion yuan, +6.6% year on year, profit before tax of 8.32 billion yuan, +6.3% year on year, retail gas volume of 30.31 billion square meters, +9.2% year over year, slightly lower than the operating target of 10% growth. The retail gas price spread was 0.501 yuan/square meter in line with expectations and remained flat year on month, but the profit margin before tax fell from 7.09% of H1 to 4.79% of H2 due to narrowing of wholesale gas spreads. The annual load rate of LNG terminals was 90.6%, +2.7pct year on year, of which H1 was 81.8% and H2 was 99.4%, which showed a significant month-on-month recovery, driving the LNG business to achieve revenue of 9.04 billion yuan, +5.9% year over year, and profit before tax of 3.65 billion yuan, +15.6% year over year.
Focus on shareholder returns and launch a three-year dividend payment plan. The company's dividend continued to increase in 2023, with a dividend of 0.2,838 yuan per share, +11.8% year-on-year, with a dividend ratio of 40% and a dividend ratio of 4.53%. On March 25, 2024, the company announced a three-year dividend distribution plan to continue to increase its dividend payout efforts and aim to increase the dividend rate from 40% to 45% by 2025.
The 2024 target will guide growth, and the value-added business can be expected in the long run. The company announced the 2024 operating target guidelines. Among them, the retail volume of natural gas increased by 10% year on year, the number of new users added 800,000, the processing volume of LNG plants increased 7% year on year, and the main business continued to grow steadily. The value-added e-commerce platform saw initial results. The annual sales volume was 74.65 million yuan, +366% year over year, and the operating scale reached a record high. The gas appliance business sold 45,900 gas appliances throughout the year, +58.8% over the same period last year. The value-added business grew rapidly and can be expected in the long term.
Risk warning: 1) Geopolitical events have exceeded expectations, and the global gas market has fluctuated greatly. 2) Natural gas prices fell short of expectations. 3) Demand growth is slowing down.