performance

On August 20, 2024, Sinopec Guande released the 2024 semi-annual report. 2024H1 achieved operating income of HK$0.331 billion, up 7.3% year on year; net profit to mother of HK$0.685 billion, down 7.9% year on year.

profiling

Huade Petrochemical's operations were steady, and revenue and gross profit increased year-on-year. 2024H1's revenue was HK$0.331 billion, up 7.29% year on year, and gross profit was HK$0.178 billion, up 16.17% year over year. The increase in revenue and gross profit was mainly due to Huade Petrochemical's use of surplus existing terminal capacity to provide handling services to third party customers, and related revenue increased year over year. 2024H1 Huade Petrochemical handled a total of 57 tankers, completing the handling of about 7.39 million tons of crude oil, an increase of about 23.58% over the previous year; transported about 5.99 million tons of crude oil, an increase of about 3.45% over the previous year.

The decline in investment income was compounded by exchange losses, and profits declined year-on-year. 2024H1's investment income was HK$0.51 billion, a year-on-year decrease of 5.3%, mainly due to a decrease in domestic terminal investment income:

(1) 6 domestic terminals: Investment income of HK$0.363 billion, a year-on-year decrease of 11.5%. The main reason was the decline in crude oil imports from local refineries and the depreciation of RMB against the Hong Kong dollar. The throughput of the six 2024H1 terminals was 0.1 billion tons, a year-on-year decrease of 4.76%; (2) Overseas storage companies: Fujairah achieved an investment income of HK$0.067 billion, up 34.7% year on year, mainly due to an increase in rental rates. Vesta achieved investment income of 0.016 billion The billion HKD rose 60.1% year over year, mainly due to reduced losses due to the sale of VTT. (3) LNG transportation: Investment income of HK$0.059 billion, a year-on-year decrease of 8.1%, mainly due to rental suspension losses and increased repair costs.

2024H1, the company's other income and net other (loss)/income was approximately HK$3.67 million, a year-on-year decrease of HK$0.053 billion. The main reason was the increase in net exchange losses resulting from the conversion of RMB dividends received by the 2024H1 company from domestic subsidiaries into US dollars and Hong Kong dollars. Combined with the above effects, 2024H1's net profit to mother was HK$0.685 billion, a year-on-year decrease of 7.9%.

Various projects are progressing smoothly, and the scale of profit is expected to improve. 2024H1 Huade Petrochemical overcame adverse factors such as the rainy season, and the Naphtha Handling Upgrading Project at Verbenzhou Wharf is progressing smoothly according to schedule. It is expected that Huade Petrochemical's revenue and profit scale will be further increased after completion and commissioning. Furthermore, one LNG ship with equipment failure at the end of 2023 has been repaired and resumed normal operation in June 2024, and the return on investment is expected to increase in the second half of the year.

Profit Forecasts and Ratings

Maintain the 2024-2026 net profit forecast of HK$1.36 billion, HK$1.42 billion and HK$1.47 billion. Maintain 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.