石化仓储物流：境内开拓新业务，境外优化资产布局。公司在国内外拥有多家石化仓储和码头公司，包括7 家国内全资或合资仓储码头公司和2 家海外仓储公司。境内方面，公司收入主要来源于子公司华德石化，投资收益来自于其他6 家码头公司。其中华德石化正在开拓针对第三方的石脑油接卸业务，预计将为客户提供240-480 万吨/年石脑油接卸服务，业务量可提升20%-40%，有望边际增加收入0.32-0.63 亿港元。境外方面，Vesta 公司2023年出售亏损的爱沙尼亚VTT 项目，预计投资收益将有所增长。Company profile
The company is the largest petrochemical storage terminal company in China and the only red-chip subsidiary of Sinopec. The company focuses on petrochemical warehousing and logistics business, covering oil handling, storage and transportation, as well as LNG ship transportation. The total handling capacity of the company's seven domestic terminals is about 0.3 billion tons/year, with a total throughput of 0.22 billion tons in 2023, accounting for 40% of the country's crude oil imports. The company's operating income in 2023 was HK$0.61 billion, down 1% year on year; net profit was HK$1.3 billion, up 199% year on year, mainly due to the low base due to the previous year's accrued losses and provisions. The company's gross margin has been stable and has been above 40% since 2017. The company has a high return on investment. The investment income from 6 terminal companies, overseas storage companies and LNG transportation companies in 2023 was HK$0.98 billion. In 2023, the company paid out HK$25 per share, up 25% year over year, with a dividend payout ratio of 48%.
Investment logic:
Petrochemical warehousing logistics: developing new business domestically and optimizing asset layout overseas. The company has a number of petrochemical warehousing and terminal companies at home and abroad, including 7 domestic wholly-owned or joint venture warehousing terminal companies and 2 overseas warehousing companies. On the domestic side, the company's revenue mainly comes from its subsidiary Huade Petrochemical, and investment income comes from 6 other terminal companies. Among them, Huade Petrochemical is developing a naphtha handling business for third parties. It is expected to provide customers with 2.4-4.8 million tons/year naphtha handling services. The business volume can be increased by 20% to 40%, and the revenue is expected to increase marginally by HK$0.032-0.063 billion. On the overseas side, Vesta sells a loss-making Estonian VTT project in 2023, and investment income is expected to increase.
LNG transportation business: additional capacity has been determined, and the return on investment can be expected to increase. The company is actively expanding its LNG transportation business. Currently, it has 8 LNG ships. Since they were all put into operation in 2018, the average annual investment income of the 8 vessels is HK$0.093 billion. In 2023, the company announced further investment in China's energy transportation, which will be used to add 3 LNG ships and will be leased to Sinopec for a long time. The 3 LNG vessels have a single capacity of 175,000 cubic meters, and delivery is expected to begin in 2027. After full capacity is invested, the company's total LNG vessel capacity will increase by 38%, and the return on investment can be expected to increase.
Profit forecasts, valuations, and ratings
Taking into account the addition of naphtha handling operations and improved investment income, the company's net profit to mother is estimated to be HK$1.36 billion, HK$1.42 billion and HK$1.47 billion respectively in 2024-2026.
Based on the net market ratio method and DDM valuation method, the target price was HK$5.36. The first coverage gives a “buy” rating.
Risk warning
Macroeconomic risks, production safety risks, risk of project construction progress falling short of expectations, risk of exchange rate fluctuations, and interest rate risks.
