Core views:
Clean energy purchase prices declined, and 24Q1 performance was +6.3% year-on-year. The company released its 2024Q1 quarterly report, achieving revenue of 6.333 billion yuan (-2.2% YoY) and net profit to mother of 480 million yuan (+6.3% YoY). Revenue declined year-on-year, mainly due to the fact that the three major natural gas indices of Europe and America fell by more than 10% year on year in the first quarter, and the purchase unit price and sales unit price of the company's clean energy business fell simultaneously. The energy service and specialty gas business is growing well, with stable earnings per ton and high gross margin, which led to an increase in net profit margin of 0.6 pct to 7.6%. In addition, share payment fees of 7.44 million yuan and interest payments on convertible bonds in the first quarter increased financial expenses, which had an impact on the increase in net profit attributable to mother.
The “one main and two wings” business structure is clear, and the ability to service+specialty contribute to profit growth. The company's clean energy business focuses on LNG and LPG, gradually forming a “dumbbell” business model with core asset chains, resources, and clients, and the gross profit margin remained stable; the overall gross margin of the energy service business reached 21% in 23 years, and energy operations focused on auxiliary extraction and recycling. 24Q1 had more than 130 low-yield and inefficient wells, and a recycling operation volume of about 100,000 tons, while promoting the smooth delivery of LPG ships during the period; in terms of specialty gases, the gross margin of high-purity helium was as high as 84% in '23, compared to 60,000. An increase of over 20%. According to the company's business plan, in 2024, the clean energy, energy service and special gas sectors achieved net profit of about 9.6 billion yuan, 4.7 billion yuan, and 0.7 billion yuan respectively.
Aerospace specialty gas has broad prospects for development, and the company has developed a card position advantage. In 2023, the company signed a contract for the special combustion gas project at the Hainan Space Launch Site. The project plans to invest 493 million yuan to provide products such as liquid hydrogen, liquid oxygen, liquid nitrogen, helium, and high-purity liquid methane for rocket launches. Wenchang International Space City will usher in its first launch in 2024, and the development prospects are broad. In the future, the company will diversify its hydrogen and helium gas business, rapidly expand its specialty gas production capacity, and form a card position in the aerospace special gas industry chain.
Profit forecasting and investment advice. Net profit for 2024-2026 is expected to be 1,566/17.84/2,083 billion yuan, respectively, corresponding to the latest PE valuation of 10.74/9.43/8.07 times. The company creates a diversified LNG gas source portfolio and actively promotes the development of energy service+special gas business. Refer to comparable companies that gave the company 14 times PE in 2024, corresponding to a reasonable value of 34.64 yuan/share, maintaining a “buy” rating.
Risk warning. Procurement price fluctuation risk; procurement model adjustment risk; exchange rate fluctuation risk.