Incident: The company released the 2024 semi-annual results report. In 2024H1, the company achieved operating income of 16.895 billion yuan, a year-on-year increase of 29.07%, and achieved net profit attributable to the parent company of 3.304 billion yuan, a year-on-year increase of 46.41%, net profit after deducting non-attributable net profit of 3.543 billion yuan, a year-on-year increase of 45.46%; of these, the second quarter achieved revenue of 8.668 billion yuan, a year-on-year increase of 36.35%, and net profit to mother of 1.883 billion yuan, the same The year-on-year increase was 75.65%, the month-on-month increase was 32.51%, after deducting non-return net profit of 2.061 billion yuan, up 78.29% year-on-year, and 39.07% month-on-month.
Ningdong Phase III contributed mainly to growth, and its performance increased significantly over the same period last year. During the reporting period, the company's performance achieved a significant year-on-year increase, mainly due to the company's Phase III olefin project being put into operation, and the production of olefin products increased significantly year-on-year.
In April 2024, the company announced that it would raise no more than 10 billion yuan by issuing shares to specific targets to invest in the construction of 2.6 million tons/year of coal-to-olefin and a supporting 0.4 million tons/year implantation of a green hydrogen coupled olefin project (Phase I). After this fundraising project is put into operation, the company's total olefin production capacity will reach 5.2 million tons/year. During the reporting period, Baofeng Group, the controlling shareholder of the company, increased its shareholding by 5.7412 million shares through the Shanghai Stock Exchange trading system, accounting for 0.078% of the company's total share capital, increasing its holdings by 0.1 billion yuan. Baofeng Group's shareholding ratio increased from 35.57% before the increase to 35.65%.
The introduction of new production capacity continues to advance, and production costs are expected to be further reduced. Since the trial production of the third phase of the company's Ningdong project in mid-September 2023, production has been stable; in February 2024, the 0.25 million ton EVA project supporting the third phase was put into trial production; the first phase of the Inner Mongolia project progressed smoothly and is expected to be completed and put into operation in October 2024; while expanding the scale of production capacity, the company further consolidates its cost advantage. Compared with the Ningdong project, the cost of the company's Inner Mongolia project is expected to be further reduced due to the reduction in freight, enol ratio, and single-ton investment costs.
Maintain a “Highly Recommended” investment rating. The company's net profit for 2024-2026 is estimated to be 8.044 billion yuan, 12.475 billion yuan, and 13.287 billion yuan respectively, and EPS is 1.10 yuan, 1.70 yuan, and 1.81 yuan respectively. The current stock price corresponding to PE is 13.9 times, 9.0 times, and 8.4 times, respectively. Maintain a “Highly Recommended” investment rating.
Risk warning: downstream demand falls short of expectations, raw material supply and price fluctuations, new production capacity falls short of expectations, and falling product prices.