BAOFENG ENERGY(SH:600989) Tianfeng Securities·2024-03-21 16:00Investment Rating - The report maintains a Buy rating for the company with a 6-month outlook [7] Core Views - The company's performance in 2023 met expectations, with a significant improvement in Q4, driven by the Inner Mongolia project [1] - Revenue in 2023 reached RMB 291.36 billion, a year-on-year increase of 2.48%, while net profit attributable to shareholders was RMB 56.51 billion, down 10.34% year-on-year [1] - The company's cost reduction and efficiency improvement efforts have strengthened its low-cost competitive advantage, particularly in coal procurement and energy-saving projects [3] - Key projects, including the Ningdong 3 1 million tons/year coal-to-olefins project and the Inner Mongolia project, are progressing steadily, contributing to future growth [4] Financial Performance - In 2023, the company achieved RMB 87.35 billion in revenue in Q4, with net profit attributable to shareholders reaching RMB 17.60 billion, up 89.25% year-on-year and 7.7% quarter-on-quarter [1] - The company's EBITDA for 2023 was RMB 9.36 billion, with a projected increase to RMB 14.85 billion in 2024E [5] - EPS for 2023 was RMB 0.77, expected to rise to RMB 1.30 in 2024E [5] Operational Highlights - The company's main raw material costs declined significantly in 2023, with gasification coal, coking coal, and thermal coal prices dropping by 19%, 25%, and 22% respectively [2] - Sales volumes of key products increased: polyethylene (83.25 million tons, up 18%), polypropylene (75.28 million tons, up 14%), and coke (697.55 million tons, up 12%) [2] - The company expanded its coal procurement channels, increasing purchases from the Ceke Port and Xinjiang by 52 million tons and 305 million tons respectively [3] Project Development - The Ningdong 3 project added 1.5 million tons/year of methanol capacity, 1 million tons/year of olefins capacity, and 900,000 tons/year of polyethylene and polypropylene capacity [4] - The Inner Mongolia project, with a capacity of 2.6 million tons/year of coal-to-olefins and 400,000 tons/year of green hydrogen-coupled olefins, is progressing as planned and is expected to be operational by 2024 [4] Valuation Metrics - The company's P/E ratio for 2023 was 20.40x, expected to decrease to 12.10x in 2024E [5] - The P/B ratio for 2023 was 2.99x, projected to drop to 2.40x in 2024E [5] - EV/EBITDA for 2023 was 13.19x, with a forecasted decline to 8.30x in 2024E [5]