Event
The company released a quarterly report, during the reporting period, the company achieved operating income of 5.486 billion yuan, an increase of 112.38% over the same period last year, and its net profit was 101 million yuan, a sharp increase of 271.48% over the same period last year, deducting 82 million yuan of non-return net profit, an increase of 162.59% over the same period last year.
Brief comment
Ningbo Haiyue's profit improvement superimposed and merged with Northern Petroleum promoted the company's first-quarter results: during the reporting period, the petrochemical industry maintained a good development trend. The PDH price difference in the first quarter maintained a high of 427 US dollars / ton, which increased by 26.71% compared with the same period last year. The expansion of the PDH price difference helped Ningbo Haiyue improve its performance. According to the profit and loss translation of minority shareholders, Ningbo Haiyue made a profit of about 120 million in the first quarter. Greatly exceeded our previous expectations (80 million), Ningbo Haiyue profit improvement superimposed company merged with Northern Oil, the company's performance improved significantly in the first quarter. In addition, the merger of Northern Oil has significantly increased the company's operating income in the first quarter. Northern Oil's committed performance in 2018 and 19 is 1.0 yuan and 126 million yuan respectively. With the acceleration of warehousing turnover and trade volume, the performance in 2018 is worth looking forward to.
CNPC and Ningbo Haiyue both made efforts, and the company's cash flow improved significantly: during the reporting period, the cash flow generated by the company's operating activities reached 233 million, an increase of 209.15% compared with the same period last year, benefiting from the merger of Tianjin North Petroleum Co., Ltd. And the increase in Ningbo Haiyue sales. The management fee for the current period was 111 million yuan, an increase of 72.95% over the same period last year, mainly due to the increase in the management expenses of the company merging Northern Petroleum and the increase in R & D expenditure in Ningbo Haiyue. Financial expenses fell by 73.53% to 15 million, mainly due to the increase in exchange gains due to the appreciation of the RMB in Ningbo Haiyue in the current period.
PDH broad profit space, isooctane demand or to meet improvement, Ningbo Haiyue Phase II has been planning, put into production production costs will be significantly reduced: PDH development space, oil prices are likely to usher in a mild recovery, the petrochemical industry for better profitability; domestic propylene supply falls short of demand, prices have bottom support; affected by the Sino-US trade war, raw material propane prices may fluctuate in the short term, but in the long run it will help to promote industry layout improvement. As for isooctane, with the stricter and stricter environmental protection and the strict implementation of the sixth national standards, the demand for isooctane is expected to improve, and Ningbo Haiyue's annual performance growth is expected. Ningbo Phase I (600000 tons of propylene and 600000 tons of isooctane) has been put into production, and Ningbo Phase II is already under planning and is expected to extend and develop in the C 3 C 4 deep processing industry chain. after the project is landed, the scale advantage is obvious and the cost will be greatly reduced.
The company's stock price is still low, much lower than the average cost of holding shares in HNA: the holding cost of the company's controlling shareholder, Zhejiang Haiyue Technology Co., Ltd. (19.31%) and HNA Cloud Investment (13.68%) is about 22.85 yuan per share, which is much higher than the company's current share price, and there is more room for further growth.
Propylene price increase performance flexibility: subsidiary Ningbo Haiyue has a total propylene production capacity of 600000 tons, and the company participates in 51%. For every 1000 yuan / ton price difference, the net profit of returning home increases by 222 million yuan, and EPS thickens by 0.48 yuan.
Profit forecast: the company is expected to return to the parent net profit of 2.96 and 350 million yuan in 2018 and 2019, EPS 0.64,0.75 yuan, PE 14X, 12x, maintaining the "overweight" rating.