BAOFENG ENERGY(SH:600989) Guotai Junan Securities·2024-08-16 08:23Investment Rating - The report maintains an "Accumulate" rating for Baofeng Energy (600989) with a target price of 21.00, down from the previous target of 21.41 [1][3]. Core Views - The recovery in polyolefin profitability and strong growth potential are highlighted, with significant capacity expansion projects underway [2][3]. - The company reported a revenue of 16.897 billion yuan for H1 2024, a year-on-year increase of 29.09%, and a net profit of 3.305 billion yuan, up 46.44% year-on-year [3]. - The second quarter of 2024 saw revenues of 8.670 billion yuan, a 36.39% increase year-on-year and a 5.39% increase quarter-on-quarter, with net profits reaching 1.884 billion yuan, up 75.80% year-on-year and 32.57% quarter-on-quarter [3]. - The report notes that the domestic apparent consumption of polyolefins in H1 2024 was 37.06 million tons, a 3.3% increase year-on-year, indicating sustained demand growth [3]. Financial Summary - For H1 2024, the company achieved a polyolefin production of 1.2227 million tons, a year-on-year increase of 87% [3]. - The average prices for polyethylene and polypropylene in Q2 2024 were 7,300 yuan/ton and 6,794 yuan/ton, respectively, reflecting increases of 5.43% and 4.15% quarter-on-quarter [3]. - The projected earnings per share (EPS) for 2024, 2025, and 2026 are 1.07 yuan, 1.75 yuan, and 1.82 yuan, respectively, revised down from previous estimates [3][4]. - The company’s total revenue is expected to grow from 35.514 billion yuan in 2024 to 56.333 billion yuan in 2025, representing a growth rate of 58.6% [4]. Project Development - New projects are progressing steadily, with the Ningdong Phase III expected to commence production by the end of 2023 and the Inner Mongolia Phase I project scheduled for October 2024 [3]. - The company plans to construct a new materials project in Xinjiang with a capacity of 3.9 million tons/year of polyolefins, which will open up significant growth opportunities [3].