Sino Prima Gas(SZ:300483) Soochow Securities·2026-01-20 12:24Investment Rating - The report gives a "Buy" rating for the company, marking its first coverage [1]. Core Insights - The company is positioned as a pioneer in deep coalbed methane extraction, with significant potential for revenue growth driven by resource and technological advantages. The company is expected to experience a performance inflection point [3][8]. - The company has successfully transformed into an upstream natural gas producer, focusing on natural gas operations after divesting its gardening business. This strategic shift is expected to enhance revenue growth and profitability [13][20]. - The deep coalbed methane industry is entering a phase of large-scale development, with deep resources being three times more abundant than shallow resources. Technological advancements are expected to reduce extraction costs significantly [37][42]. Summary by Sections Company Transformation and Growth Potential - The company has a sevenfold potential for production increase in its self-produced gas, with fiscal support further enhancing profits. The Shilou West Block, adjacent to the Daji Block, has a designed natural gas production capacity of 3.5 billion cubic meters per year, with a significant production release space compared to 2024 [3][50]. - The company has established a joint project team with experienced partners to facilitate the development of the Shilou West Block, which is expected to contribute to substantial revenue growth [3][50]. Industry Outlook - The deep coalbed methane sector is characterized by a promising outlook, with technological breakthroughs leading to reduced costs. The industry has transitioned into a deep-scale development phase since 2021, with significant advancements in exploration and extraction technologies [37][42]. - The report highlights that the resource potential of deep coalbed methane is substantial, with estimates indicating that the resource volume at depths greater than 1500 meters is approximately 69 trillion cubic meters, significantly higher than that of shallow coalbed methane [42][45]. Financial Projections - The company is projected to achieve a net profit of 1.02 billion yuan in 2025, with a year-on-year growth rate of 114%, and further growth expected in subsequent years [1][8]. - The report anticipates that the company's earnings per share (EPS) will improve significantly, reaching 1.88 yuan by 2027, reflecting the expected operational improvements and market conditions [1][8].