Incident: Sinopec Guande announced its 2023 annual report. In 2023, we achieved revenue of HK$610 million, a year-on-year decrease of 1.01%, and realized net profit to mother of HK$1,299 million, an increase of 198.6% over the previous year.
Clean the lead and go to battle lightly, and the core business is expected to continue to grow. The company's gross profit decreased by about 10.23% year on year in 2023, mainly due to the year-on-year increase in depreciation expenses due to Huade Petrochemical replacing new subsea pipelines in 2023. At the same time, the company turned a loss into a profit, mainly due to the fact that the company stopped carrying out the Batam project in 2022 and needed PT. West Point's non-current assets are provided for impairment.
Cash dividends of HK25 cents per share for the whole year to share the company's development with investors. On March 15, 2024, the Securities Regulatory Commission issued “Opinions on Strengthening the Supervision of Listed Companies (Trial)”, which requires listed companies to formulate active and stable cash dividend policies and clarify investors' expectations. Strengthen restrictions on inquiries, interviews, and supervisory measures, and urge companies that do not pay dividends or have few dividends to raise the level of dividends, and companies that invest more financially to increase their dividend ratio.
As the only red chip subsidiary of Sinopec listed in Hong Kong, the company paid a cash dividend of 25 HK cents per share for the full year of 2023 after taking into account the cash flow situation and future development needs. After deducting the cash dividend of 10 HK cents per share already paid in the medium term, the cash dividend per share for the end of 2023 was 15 HK cents, an increase of 25.00% over the previous year. Continue to create value for the Company's shareholders.
Upgrade supporting facilities at Verbena Cay Wharf to improve handling capacity. On November 9, 2023, Huade Petrochemical, a wholly-owned subsidiary of the company, and Sinopec Guangzhou Engineering signed a construction agreement on a construction project to upgrade supporting facilities at the Verbenzhou Wharf to pick up naphtha. The construction project will ensure the safe, stable and efficient operation of Huade Petrochemical and enhance Huade Petrochemical's business volume, thereby further improving its profitability and economic efficiency. Supervising Sinopec Guangzhou Engineering has experience, expertise and professionals. Sinopec Guangzhou Engineering's participation in construction projects will help ensure timely implementation and delivery of construction projects and ensure the quality of construction projects.
Profit forecast and investment advice: Considering that the company has plenty of cash to actively explore the market, it is expected to improve the overall tank capacity level. The company continues to lay out the LNG transportation business, consolidate its position as a leading domestic crude oil terminal service provider, and enjoy higher profits. We are optimistic about the company's medium- to long-term growth potential and maintain a “buy” rating.
Risk warning: global economic recession, terminal shoreline and land resource restrictions, production safety risks, etc.