According to the research report released by Sinolink, they have initiated coverage on Sinopec Kantons (00934) and given it a "buy" rating, factoring in the new naphtha discharging business and improvement in investment income. Sinolink projects that Sinopec Kantons' net income attributable to shareholders will be HKD 1.36 billion, HKD 1.42 billion and HKD 1.47 billion from 2024 to 2026, with a target price of HKD 5.36.

The main points of the report are as follows:

Petrochemical storage and logistics: developing new business domestically and optimizing asset layout overseas. The company has several petrochemical storage and terminal companies at home and abroad, including seven domestic wholly-owned or joint venture storage and terminal companies and two overseas storage companies. In terms of domestic operations, the company's revenue mainly comes from its subsidiary, Huade Petrochemical, and investment income comes from six other terminal companies. Huade Petrochemical is currently expanding its third-party naphtha discharging business, expecting to provide 2.4-4.8 million tons/year of naphtha discharging services to clients, which can increase business volume by 20%-40% and potentially generate an additional income of HKD 320 million to HKD 630 million. In terms of overseas operations, Vesta Company will sell its loss-making VTT project in Estonia in 2023, which is expected to lead to an increase in investment income.

LNG transportation business: additional capacity assured, investment income growth can be expected. The company is actively expanding its LNG transportation business, currently owning eight LNG carriers. Since all eight ships have been put into operation in 2018, the average annual investment income of the eight ships has been HKD 930 million. In 2023, the company announced plans to further invest in China Energy Transportation Investment and add three LNG carriers, which will be leased long-term to China Petroleum & Chemical Corporation. The capacity of each of the three LNG carriers is 175,000 cubic meters, and delivery is expected to begin in 2027. After all the capacity is put into operation, the total capacity of the company's LNG carriers will increase by 38%, and investment income growth can be expected.

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In 2023, the company's overall sales volume was 18,000 kiloliters, an increase of 28.10% YoY, showing significant growth. In terms of product structure, the operating income of the products valued between CNY 1-3 billion were CNY 401 million, CNY 1.288 billion and CNY 60 million, respectively.