BAOFENG ENERGY(SH:600989) Soochow Securities·2024-03-21 16:00Investment Rating - The investment rating for Baofeng Energy is "Buy" (maintained) [1] Core Views - The company reported a revenue of 29.136 billion yuan in 2023, a year-on-year increase of 2.5%, and a net profit attributable to shareholders of 5.651 billion yuan, a decrease of 10.3% year-on-year. The Q4 performance showed a significant improvement with a revenue of 8.7 billion yuan, up 25.8% year-on-year and 19.5% quarter-on-quarter, with a net profit of 1.76 billion yuan, up 89.3% year-on-year [3] - The olefin segment benefited from a decline in coal prices, improving cost structures, and the contribution from the Ningdong Phase III project. The revenue from olefin products reached 14 billion yuan, a year-on-year increase of 20.1%, with a gross margin of 30.3%, up 2.2 percentage points from the previous year [3] - The company is expanding its coal-to-olefin capacity, with plans for a 5 million ton capacity in Inner Mongolia, which is expected to significantly enhance performance in the olefin segment [3] Summary by Sections Financial Performance - Total revenue for 2022 was 28.43 billion yuan, with a projected increase to 39.298 billion yuan in 2024, reflecting a year-on-year growth of 34.88% [2] - The net profit attributable to shareholders for 2022 was 6.303 billion yuan, projected to rise to 8.986 billion yuan in 2024, indicating a growth of 59.04% [2] - The latest diluted EPS for 2023 was 0.77 yuan per share, expected to increase to 1.23 yuan in 2024 [2] Business Segments - The olefin segment's revenue was 14 billion yuan in 2023, with a gross margin of 30.3%. The sales volumes for polyethylene and polypropylene were 830,000 tons and 750,000 tons, respectively, showing increases from the previous year [3] - The coking segment faced challenges with a revenue of 11.2 billion yuan, down 14.6% year-on-year, due to weak downstream demand [3] Capacity Expansion - The company’s coal-to-olefin capacity reached 2.2 million tons per year by the end of 2023, with plans for an additional 5 million tons in Inner Mongolia, expected to start production in Q4 2024 [3] Valuation and Forecast - The forecast for net profit attributable to shareholders is adjusted to 9 billion yuan for 2024 and 15 billion yuan for 2025, with a new estimate of 16.1 billion yuan for 2026. The corresponding P/E ratios are projected at 12.7, 7.6, and 7.1 times [3]