Event: The company publishes its report for the first quarter of 2024. 2024Q1, the company achieved operating income of 6.3 billion yuan in a single quarter, -2% YoY, -10%; realized net profit of 480 million yuan, +6% YoY, +174% month-on-month; realized net profit of 460 million yuan, +3% YoY and +202% month-on-month after deduction.
Comment:
The three major businesses of clean energy, energy services, and specialty gases have developed steadily, with steady growth in 24Q1:1) In terms of clean energy, LNG business: In the context of an overall decline in natural gas prices, the company increased its procurement of spot resources, actively matched downstream users such as industrial and gas power plants, and showed strong development resilience; LPG business: the company continued to strengthen its integrated advantages, optimize operation models, and flexible allocation of resources over the short and long term, with equal emphasis on the civil gas and chemical raw gas markets, and stable sales capacity. 2) In terms of energy services, 24Q1 has a natural gas recycling and treatment supporting service capacity of 100,000 tons; it is operating more than 130 low-yield and inefficient natural gas wells; LPG ships (New Bauhinia) have been successfully delivered, and LNG handling and storage services have been carried out steadily. 3) In terms of specialty gases, 24Q1's high-purity helium production and sales volume exceeded 60,000 square meters, an increase of more than 20% over the previous year; the hydrogen project has an operating capacity of 20,000 m3/hour, and the development momentum is good; the company is actively expanding the retail market for specialty gas terminals to accelerate the implementation of the “resource+terminal” model. The three major business systems have developed collaboratively, and the integrated industrial chain pattern has significant advantages, helping the company's 24Q1 performance grow significantly.
Continue to promote the share repurchase plan, demonstrating the company's confidence in development: On April 23, 2024, the company issued an announcement to launch the fourth share repurchase plan after listing. The proposed share repurchase amount is not less than 100 million yuan, no more than 150 million yuan, and the share repurchase price is no more than 41.6 yuan/share, all of which will be used to implement the employee incentive plan later. Prior to that, the company implemented 1 and 2 share repurchase plans in 2022 and 2023, respectively, with total capital of 195 million yuan and 206 million yuan, respectively. A consistent and stable share repurchase plan helps maintain the company's investment value and boosts investor confidence.
Constructing a “sea air+land gas” dual resource pool and the entire industry chain pattern, the company's clean energy business is developing with high quality: LNG business: In terms of marine gas, the company currently has good long-term contract implementation, and accurately matches long-term procurement according to the seasonal distribution of downstream demand to ensure efficient allocation of resources; at the same time, the company relies on the advantages of its own ships to scientifically study domestic and foreign gas price trends, increase spot resource purchases, and optimize the ocean gas resource pool. In terms of land gas, the company can independently control the LNG production capacity scale of 700,000 tons through the layout of energy operation service projects and traditional LNG liquefaction plants.
LPG business: Relying on the “integration” advantages of LPG autonomous shipping, receiving stations, warehousing, etc., the company signed an annual long-term resource procurement agreement with upstream resource parties and formed a stable resource guarantee relationship. The volume of inbound international resources purchased in Hong Kong has been ranked first in the South China market all year round. The company continues to consolidate its leading position in the LPG market in South China, Hong Kong and Macao, and actively explore surrounding markets such as Hunan, Guangxi, Jiangxi, Hubei, etc., to seek layout opportunities in the gas market for chemical raw materials in East China, and actively promote the construction of supporting facilities such as Huizhou LPG terminals and storage areas. Through the layout of the “sea air+land gas” dual resource pool, an “end-to-end” integrated whole industry chain pattern has gradually been formed, and the core competitiveness of the clean energy business continues to increase.
Relying on the advantages of the industrial chain to develop energy services and specialty gas businesses, the company's profit stability was further enhanced: in the energy service business sector, the company's wellhead gas recycling support service volume was about 380,000 tons in 2023, and single-ton service revenue remained basically stable, and the focus was on promoting independent LNG shipping and leasing business. A newly purchased LNG carrier was delivered, while actively implementing the investment and construction progress of the IPO fund-raising project carrier and self-purchased transport vessels. In the specialty gas business segment, on the one hand, the company continues to lay out direct end customers in the high-purity ammonia business to build a healthy business development ecosystem. On the other hand, the company completed the restructuring of Zhengtuo Gas through integration and obtained 70% of its shares, effectively making up for the company's shortcomings in various hydrogen production technologies and hydrogen gas operation and management, and accelerating the implementation of the company's on-site hydrogen production business serving industrial and chemical customers (and radiating hydrogen for surrounding hydrogen fueling stations), further improving the company's layout in the hydrogen business segment.
Profit forecast, valuation and rating: Considering that the LPG business growth fell short of our previous expectations, we slightly lowered the company's profit forecast for 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is 15.04 (1% reduction), 17.33 (4% reduction), and 1,998 billion yuan, respectively, equivalent to EPS of 2.38, 2.74, and 3.16 yuan, respectively. The company formed an integrated whole industry chain pattern, and the clean energy business developed actively and steadily. Relying on the advantages of the industrial chain to develop energy services and specialty gas businesses, the future development momentum is strong, so it maintains the company's “buy” rating.
Risk warning: Risk of large fluctuations in overseas natural gas prices, risk of large fluctuations in international crude oil prices, risk of downstream demand growth falling short of expectations.