BAOFENG ENERGY(SH:600989) Huaxin Securities·2024-08-13 01:25Investment Rating - The report assigns a "Buy" rating for Baofeng Energy (600989.SH) [1] Core Views - The significant growth in revenue and profit for Baofeng Energy in the first half of 2024 is primarily attributed to the increase in both volume and price of polyolefins, driven by the commissioning of the Ningdong Phase III coal-to-olefins project [5][6] - The company is expected to maintain strong growth potential due to the upcoming commissioning of the Inner Mongolia Phase I project, which will support future performance [6] - Baofeng Energy is enhancing its technological advantages and accelerating the development of new technologies, with substantial investments in R&D [7] Summary by Relevant Sections Financial Performance - In the first half of 2024, Baofeng Energy achieved operating revenue of 16.897 billion yuan, a year-on-year increase of 29.09%, and a net profit attributable to shareholders of 3.305 billion yuan, up 46.44% year-on-year [4] - In Q2 2024 alone, the company reported operating revenue of 8.67 billion yuan, a year-on-year increase of 36.39%, and a net profit of 1.88 billion yuan, reflecting a year-on-year growth of 75.8% [4] Production and Pricing - The production of polyolefins reached 1.2227 million tons in the first half of 2024, marking an 87% increase year-on-year [5] - The average price of polyethylene products, such as LLDPE film grade, was 8,417 yuan per ton in the first half of 2024, reflecting a 2.6% increase year-on-year [5] Future Growth Drivers - The Ningdong Phase III project, which utilizes advanced DMTO technology, is expected to significantly enhance the company's production capacity, adding 1.5 million tons of methanol and 1 million tons of olefins annually [6] - The project is anticipated to commence production of polyolefin products by October 2024, contributing to long-term revenue growth [6] R&D and Technological Advancements - Baofeng Energy invested 740 million yuan in R&D in the first half of 2024, with a focus on maintaining leadership in coal-to-olefins technology and developing new chemical raw materials [7] - The company has successfully developed four new varieties of coke and has positive market feedback on its new product formulations [7] Earnings Forecast - The earnings per share (EPS) for Baofeng Energy is projected to be 1.14 yuan in 2024, 1.84 yuan in 2025, and 2.03 yuan in 2026, with corresponding price-to-earnings (P/E) ratios of 13.4, 8.3, and 7.5 [8]