BAOFENG ENERGY(600989) Guohai Securities·2024-10-15 06:30Investment Rating - The report maintains a "Buy" rating for Baofeng Energy (600989.SH) [1] Core Views - The oil-coal price gap is expected to widen, enhancing the cost advantage of the Inner Mongolia project [1] - The company is positioned as a leading player in coal-to-olefins with significant cost advantages [21] - The profitability of the coke segment is anticipated to reach a bottom, with favorable policies potentially leading to a recovery in the industry [8] Summary by Sections Financial Performance - In 2023, Baofeng Energy achieved revenue of 291.36 billion yuan, a year-on-year increase of 2.48%, while net profit attributable to shareholders was 56.51 billion yuan, a decrease of 10.34% [28] - The average selling price for polyethylene in 2023 was 7,083.48 yuan/ton, down 5.09% year-on-year, and for polypropylene, it was 6,758.90 yuan/ton, down 8.60% year-on-year [28] - The company expects revenues of 355 billion, 549 billion, and 591 billion yuan for 2024, 2025, and 2026 respectively, with net profits of 74 billion, 144 billion, and 178 billion yuan [8] Production Capacity and Cost Advantages - The Inner Mongolia olefins project is set to begin trial production in October 2024, with a projected net profit of 2,811 yuan/ton for polyethylene, significantly higher than the Ningdong project [7] - The company has a total olefins capacity of 210 million tons/year, with plans for further expansion [44] - The report forecasts that the company's polyethylene and polypropylene segments will see substantial growth in gross profit over the next three years [44] Market Position and Industry Outlook - The report highlights the increasing domestic production capacity for polyethylene and polypropylene, which is expected to reduce reliance on imports [69] - The coke industry is currently experiencing a supply-demand imbalance, but recovery is anticipated due to new policies and increased demand from the steel sector [8] - The report emphasizes the importance of the coal-to-olefins segment as a key profit driver for the company [32]