Maintain the increase rating and raise the target price: We maintain the company's 24/25/26 EPS at 1.21/1.78/1.87 yuan. Refer to the comparable company that gave the company 18XPE in 2024, raised the target price by 21.78 yuan (originally 18.15 yuan), maintaining the “gain” rating.

2024Q1 performance was under pressure, and the decline in coal coke prices dragged down performance: the company achieved revenue of 8.23 billion yuan in 2024Q1, +22.19% year over year, and net profit to mother of 1.42 billion yuan, +19.89% year over year. The coal coke sector was dragged down due to a sharp decline in new downstream construction. The decline in coal prices affected the company's 2024Q1 performance. The company's Q1 performance was under slight pressure, but the olefin-coal price gap widened month-on-month.

The average price of polyethylene/polypropylene/coke in 2024Q1 was 6929/6523/1,533 yuan/ton, respectively, -1.27%/-3.28%/-8.94% month-on-month. According to wind data, LLDPE-thermal coal/polypropylene-thermal coal/coke-coking coal price differences were 4844/5096/-24 yuan, respectively, -4.3%/-4.1%/-263.5% month-on-month.

Production and operation are improving quality and efficiency, and new project construction guarantees growth: the company's methanol production and olefin yield have further increased, and progress has been made in coal energy saving and consumption reduction, and procurement and sales logistics. The company's new production capacity was implemented one after another, contributing to the increase: Ningdong Phase III's 1 million tons/year coal-to-olefin project added 75% of polyolefin production capacity, and the 250,000 tons/year EVA plant was put into trial production in February. The first phase of the 3 million tons/year olefin project in Inner Mongolia progressed smoothly according to the plan. It is expected that polyolefin production capacity will drop to 5.2 million tons/year by the end of 2024.

The coal-to-olefin leader has a strong cost advantage and is accelerating the promotion of “carbon neutrality”: the company's investment, operation, and financial costs are lower than those of its peers, and the first phase of Inner Mongolia will support 400,000 tons/year of green hydrogen couplings.

Risk warning: Oil prices and coal prices fluctuated greatly; downstream demand and project commissioning progress fell short of expectations.