BAOFENG ENERGY(SH:600989) CMS·2024-08-12 23:40Investment Rating - The report maintains a "Strong Buy" investment rating for the company [2][3]. Core Views - The company reported significant year-on-year growth in its 2024 H1 performance, with operating revenue reaching 16.897 billion yuan, a 29.09% increase, and net profit attributable to the parent company at 3.305 billion yuan, up 46.44% [1]. - The company is set to benefit from the upcoming production of its Inner Mongolia project, which is expected to enhance its growth potential [2]. - The report highlights the recovery in profitability for the polyethylene and polypropylene segments due to a decrease in coal prices, which has improved the margins for coal-to-olefins production [2]. Financial Performance Summary - In 2024 H1, the company achieved revenue of 16.897 billion yuan, a 29.09% increase year-on-year, and a net profit of 3.305 billion yuan, reflecting a 46.44% growth [1]. - The second quarter alone saw revenue of 8.670 billion yuan, a 36.39% increase year-on-year, and a net profit of 1.884 billion yuan, up 75.80% year-on-year [1]. - The average profit for coal-to-polypropylene was reported at 1,073 yuan per ton, showing a clear advantage over other production routes [2]. Segment Analysis - Olefins Segment: The report indicates stable growth in polyethylene and polypropylene demand, with respective consumption increases of 3.0% and 3.5% year-on-year. The company’s revenue from polyethylene and polypropylene reached 4.087 billion yuan and 3.815 billion yuan, marking increases of 69.23% and 75.48% year-on-year [2]. - Coking Segment: The coking segment faced challenges due to weak downstream demand, resulting in a revenue decline of 3.40% year-on-year, with an average price of 1,458.23 yuan per ton, down 6.89% [2]. - New Projects: The Inner Mongolia project is progressing well, with the first production unit expected to start trial production in October 2024. Additionally, the Xinjiang coal-to-olefins project is set to expand the company's growth opportunities [2]. Future Earnings Forecast - The report projects net profits for the company to be 8.044 billion yuan, 12.475 billion yuan, and 13.287 billion yuan for the years 2024, 2025, and 2026, respectively, with corresponding EPS of 1.10 yuan, 1.70 yuan, and 1.81 yuan [2][3].