BAOFENG ENERGY(SH:600989) Shanxi Securities·2025-10-10 10:56Investment Rating - The report maintains a "Buy-B" rating for the company [3]. Core Insights - The company is a leading player in coal-to-olefins, with the Inner Mongolia project set to enhance growth potential. The company operates in three main business segments: olefins, coking, and fine chemicals. As of the end of 2024, the domestic coal-to-olefins total capacity is 13.42 million tons per year, with the company's capacity accounting for approximately 23.8% of the national total. The company has a leading position in terms of unit product cost and energy consumption [3][4][59]. Summary by Sections Company Overview - The company was established in November 2005 and has developed a comprehensive coal chemical circular economy industry chain, focusing on coal mining and modern coal chemical as its core business [14][18]. Business Segments - The company has three main business segments: olefins (mainly producing polyethylene and polypropylene), coking (producing coke and by-products), and fine chemicals (producing refined products from coal tar and benzene) [18]. Production Capacity and Projects - The company has a current olefins production capacity of approximately 510,000 tons per year, with plans to increase capacity significantly through ongoing projects, including the Inner Mongolia coal-to-olefins project, which is the largest of its kind globally [20][57]. Financial Performance - The company’s revenue has shown consistent growth, increasing from 8.03 billion yuan in 2016 to 32.98 billion yuan in 2024, with a compound annual growth rate (CAGR) of 19.3%. The net profit has also increased from 1.72 billion yuan to 6.34 billion yuan during the same period [21][24]. Cost Advantages - The company benefits from significant cost advantages in coal-to-olefins production, with unit investment costs at 1.59 billion yuan per ton, lower than the industry average of 2.0 to 2.3 billion yuan per ton. This cost efficiency is attributed to large-scale facilities and innovative processes [4][59]. Market Trends - The report highlights a decreasing reliance on imports for polyethylene and polypropylene, with domestic production capacity expanding significantly. The net import dependence for polyethylene has dropped from 46.8% in 2020 to 31.4% in 2023, indicating a shift towards self-sufficiency [36][43]. Profitability Forecast - The company is projected to achieve net profits of 12.2 billion yuan, 13.2 billion yuan, and 14.4 billion yuan for the years 2025, 2026, and 2027, respectively, with corresponding price-to-earnings (PE) ratios of 11, 10, and 9 times [5].