Incident: The company released its 2024 quarterly report, achieving operating income of 58.4 billion yuan, +4% year-on-month, -5% month-on-month, net profit of 2.14 billion yuan, +110% year-on-year, +78% month-on-month after deducting non-net profit of 1.82 billion yuan, +212% year-on-year and +78% month-on-month. The results were in line with expectations.
Sales of main products have been steady, and overall coal costs have declined. During the 24Q1 period, the company achieved sales of 495/366/1.45 million tons of refined and chemical products, respectively. The average sales price was 5315/5263/8339 yuan/ton, respectively, -7%/+6%/-1% year-on-year. In terms of cost, the average purchase price of the company's coal/butylene glycol/crude oil during the Q1 period was 738/8070/4235 yuan/ton, which was -25%/-22%/+3% year-on-year, respectively. Among them, coal costs declined significantly.
Crude oil prices stopped falling and rebounded, and chemical price spreads improved month-on-month. During the 24Q1 period, the price of Brent crude oil rose cumulatively by about 10 US dollars/barrel, reversing the downward trend since 23Q4, and also contributed some of the company's inventory earnings. In terms of downstream products, thanks to increased operating rates in industries such as polyester and styrene, aromatic hydrocarbon products remained booming. Among them, during the Q1 period, the price difference between PX/pure benzene and crude oil was +4%/+24%, respectively. Furthermore, the price spread of olefin products also showed signs of marginal improvement in Q1. Among them, the price difference between LLDPE/polypropylene and crude oil was +1%/+4%, respectively.
Domestic refineries have entered a peak maintenance season, and chemical profits are expected to increase marginally. Since April, the main domestic refineries have gradually ushered in a peak maintenance period. According to wind data, as of April 18, the operating rate of domestic main refineries was 77.8%, down about 2.9 pcts from the March high. Against the backdrop of shrinking supply, chemical price support is strengthening, and profits are expected to improve marginally.
Projects under construction have been put into operation one after another, and the company is expected to shift from high expenses to high dividends. 1) The year 23 was the peak period for the company's project construction. The annual capital expenditure reached 39.7 billion yuan, a new high since the refinery was put into operation in '19. After entering 24 years, the projects under construction will be put into operation one after another. Among them, the 1.6 million ton high performance resin and new material project is expected to be fully put into operation in 24Q2. In the Kanghui functional film project, 12 lines at the Fenhu base have been put into operation one after another, 12 lines at the Nantong base are expected to be put into operation one after another in 24H2. In the lithium battery diaphragm project, the 440 million square meter diaphragm at the Yingkou base is expected to be fully produced in 24H1.
2) With the above projects put into operation, the company's capital expenditure intensity will decline marginally from 24, and the priority of debt repayment and dividends is expected to increase.
Profit forecast and investment rating: We maintain the company's net profit forecast for 2024-2026 at 87/106/12.4 billion yuan. Based on the closing price on April 22, the corresponding PE is 12.6/10.3/8.9, maintaining a “buy” rating.
Risk warning: Production progress falls short of expectations, demand recovery falls short of expectations, raw material prices fluctuate