JINHONG GAS(SH:688106) Guotai Junan Securities·2024-03-31 16:00Investment Rating - The report maintains a "Buy" rating for the company, with a target price adjusted to 26.24 CNY from the previous 29.90 CNY [5][15]. Core Insights - The company achieved a net profit of 287 million CNY in 2023, representing a 50% year-on-year growth, and is expected to alleviate capacity constraints for high-purity ammonia and other key products with new capacity coming online in 2024 [15]. - The revenue growth for high-margin specialty gas business exceeded 46%, increasing its share to 46.3% of total revenue, which further improves profitability metrics [15]. - The company has secured long-term contracts, including a significant order for oxygen and hydrogen products worth approximately 2.4 billion CNY, which will contribute stable revenue starting in 2025 [15]. Financial Summary - Revenue is projected to grow from 2,427 million CNY in 2023 to 3,728 million CNY by 2026, reflecting a compound annual growth rate (CAGR) of approximately 10% [7]. - Operating profit (EBIT) is expected to increase from 422 million CNY in 2023 to 758 million CNY in 2026, with an EBIT margin improving from 17.4% to 20.3% over the same period [7]. - Net profit is forecasted to rise from 315 million CNY in 2023 to 611 million CNY in 2026, maintaining a net profit margin of around 13% [7]. Valuation Metrics - The company is assigned a price-to-earnings (PE) ratio of 32 times for 2024, which is above the industry average of 27 times, reflecting its stable performance compared to peers [15]. - The expected earnings per share (EPS) for 2024 is adjusted to 0.82 CNY, with further increases to 1.06 CNY in 2025 and 1.25 CNY in 2026 [15]. Market Position - The company has a strong market position with a utilization rate of 99.58% for its existing high-purity ammonia capacity, indicating robust demand despite price fluctuations [15]. - New production capacities for various specialty gases, including 16,000 tons of high-purity ammonia and 400,000 tons of carbon dioxide, are set to launch in 2024, which will help mitigate current supply constraints [15].