Core views:
The supply chain business led to high revenue growth, with a year-on-year performance of +5.4% in the first half of the year. The company released its 24-year semi-annual report, achieving revenue of 14.124 billion yuan (YoY +27.4%) and net profit of 0.289 billion yuan (YoY +5.4%), of which Q2 net profit to mother was 0.208 billion yuan (+6.4% YoY). The high increase in revenue was mainly due to supply chain business contributions, while gas business revenue declined slightly. The performance growth rate was less than the revenue growth rate. It was mainly due to the low profit margin of the supply chain business, but the gross margin in the gas business widened. The 24H1 gross profit margin was 6.4% (-0.4pct year over year), and operating cash flow of 0.098 billion yuan was corrected compared to 24Q1 (-0.524 billion yuan). In recent years, dividends have continued to be high. The 24E dividend rate is 4.5% + based on a 70% dividend rate.
The gross margin of the gas business has increased, and gross margin by sector has increased. By business, the 24H1 urban fuel sector's revenue was -12.6% year over year, and gross margin was +1.97 pct year over year, mainly due to a decrease in gas purchase prices. In the first half of the year, the supply chain business achieved revenue of 6.752 billion yuan (+155.5%) and gross margin of +0.77 pct year over year. The company actively expands new energy businesses such as hydrogen energy, heat energy, photovoltaics and energy storage, and strives to build a comprehensive energy supplier. The gross margin of new energy and extended businesses increased in the first half of the year.
Optimistic about medium- to long-term growth in momentum, steady profit execution at favorable prices. On the gas volume side, 24H1 gas supply was 2.4 billion square meters (same year over year), with Q1 +3.2% year over year and -2.6% year over year in Q2, or a short-term slowdown in downstream demand. I am optimistic that falling gas prices will drive long-term gas volume growth. According to the plan of the Foshan Municipal Development and Reform Commission, the CAGR for natural gas consumption in the 14th Five-Year Plan and the 15th Five-Year Plan is 20-25% and 10-15%. In terms of gas prices, the company's non-residential gas accounts for more than 95%. Recently, the Foshan Municipal Development and Reform Commission reaffirmed the non-residential price linkage mechanism. It is estimated that the 24H1 urban fuel business gross margin increased by about 0.03 yuan/square meter (+10.9% year over year), corresponding gross margin of more than 22 or 23 years.
Profit forecasting and investment advice. The estimated net profit for 24-26 will be 0.97/1.06/1.14 billion yuan, respectively, corresponding to 13.8/12.6/11.6 times the latest PE valuation. Urban fuel business profits rebounded, supply chain business scaled up, and steady performance guaranteed dividends. For reference, comparable companies gave the company 15 times PE in 2024, corresponding to a reasonable value of 11.25 yuan/share, giving it a “buy” rating.
Risk warning. Macroeconomics affects demand; raw material price fluctuation risk; gas price policy risk.