BAOFENG ENERGY(600989) Guoxin Securities·2024-11-01 02:25Investment Rating - The investment rating for the company is "Outperform the Market" [3][14]. Core Views - The company's net profit attributable to shareholders decreased in Q3 2024, with revenue of 7.38 billion yuan (up 1% year-on-year, down 15% quarter-on-quarter) and a net profit of 1.23 billion yuan (down 25% year-on-year, down 35% quarter-on-quarter) [1][10]. - The decline in profitability is primarily due to maintenance of main product facilities, leading to a decrease in production and sales volume, along with a drop in prices for some main products [1][10]. - The company is progressing well with new projects, including the Inner Mongolia olefin project, which is expected to start production gradually in Q4 [1][14]. Summary by Relevant Sections Financial Performance - In Q3 2024, the company reported a revenue of 7.38 billion yuan, with a gross margin of 34.1% and a net margin of 16.7%. The total expense ratio was 9.6% [1][10]. - The average selling prices for polyethylene and polypropylene were 7,023 yuan/ton (down 3% year-on-year, down 4% quarter-on-quarter) and 6,807 yuan/ton (up 2% year-on-year, up 0.2% quarter-on-quarter), respectively [1][10]. Production and Sales - The production and sales volumes for polyethylene in Q3 2024 were 248,600 tons and 250,500 tons, respectively, while for polypropylene, they were 256,900 tons and 252,100 tons, respectively [1][10]. - The company’s coke production and sales were stable, with production at 1.7796 million tons and sales at 1.7707 million tons in Q3 2024 [1][10]. Cost and Pricing - The average procurement prices for key raw materials were 554 yuan/ton for gasification raw coal, 1,086 yuan/ton for coking coal, and 427 yuan/ton for thermal coal, all showing a year-on-year decline [1][10]. - The cost of oil-based and coal-based olefins was reported at 8,276 yuan/ton and 7,336 yuan/ton, respectively, with the cost gap narrowing from 1,508 yuan/ton in Q2 to 940 yuan/ton in Q3 [1][10]. Future Outlook - The company is expected to see profit growth driven by the expansion of polyethylene production capacity, despite current challenges from maintenance and weak product demand affecting prices [1][14]. - The net profit forecasts for 2024-2026 have been adjusted to 6.552 billion yuan, 12.206 billion yuan, and 12.413 billion yuan, respectively, with corresponding EPS of 0.89, 1.66, and 1.69 yuan [1][14].