Investment Rating - The report maintains a "Buy" rating for the company with a target price of HKD 4.2, indicating a potential upside of 42% from the current price of HKD 2.96 [4][10]. Core Insights - The company's revenue for the first half of 2024 reached HKD 25.2 billion, representing a 21% increase year-on-year, while net profit significantly declined by 84% to HKD 130 million due to falling coke prices [1][2]. - The coke price has decreased by approximately 16% compared to the same period last year, leading to pressure on profits, although the company's competitive position is strengthening [1][10]. - The chemical business continues to grow, with revenue increasing by 20% to HKD 10.4 billion, driven by higher average selling prices and increased sales volumes of styrene [1][2]. Summary by Sections Financial Performance - In the first half of 2024, the coke and coking business generated revenue of HKD 9.8 billion, up 29%, with a gross margin of 7.5% [1]. - The chemical segment's revenue was HKD 10.4 billion, with a gross margin of 8.5%, reflecting a 12.7% increase in pre-tax profit [1][2]. - The company has adjusted its net profit forecasts for 2024, 2025, and 2026 to HKD 420 million, HKD 820 million, and HKD 1.71 billion, respectively, with corresponding EPS of HKD 0.10, HKD 0.21, and HKD 0.43 [1][3]. Market Conditions - The coke market is currently experiencing a downturn, with weak demand leading to significant price drops, and the overall industry operating rate is declining [1][2]. - The company has successfully launched a 4.8 million-ton coking project in Indonesia, with 3.2 million tons already in production, and is expanding its international market presence [1][2]. Valuation Analysis - The report employs comparable company analysis and DCF methods for valuation, concluding a target price of HKD 4.2 based on a PE multiple of 20x, reflecting the long-term valuation despite current industry challenges [10][12]. - The DCF analysis estimates the company's market value at HKD 19 billion, supporting the target price of HKD 4.3 [10][13].
中国旭阳集团：焦炭利润下滑，化工持续增长