BAOFENG ENERGY(SH:600989) Great Wall Securities·2024-04-08 16:00Investment Rating - The report maintains a "Buy" rating for Baofeng Energy, expecting the stock price to outperform the industry index by over 15% in the next six months [3][14]. Core Views - The report highlights that new projects are driving the company's growth, with an expected improvement in annual performance compared to the previous year. The company is anticipated to benefit from the gradual release of new production capacities, particularly from the Ningdong Phase III project and other ongoing initiatives [2][7]. Financial Performance Summary - In 2023, Baofeng Energy reported a revenue of 29,136 million yuan, a year-on-year increase of 2.5%. However, the net profit attributable to shareholders decreased by 10.34% to 5,651 million yuan [1][2]. - The company's operating income for Q4 2023 was 8,735 million yuan, reflecting a quarter-on-quarter increase of 19.48%, with a net profit of 1,760 million yuan, up 7.70% from the previous quarter [1][2]. - The overall gross margin for 2023 was 30.40%, down 2.47 percentage points from the previous year, primarily due to declining prices of polyethylene and coke products [2]. Project Developments - The report details significant progress in various business segments, including: - The Ningdong Phase III coal-to-olefins project, which is the world's first 1 million-ton DMTO unit, has been completed and is expected to increase polyethylene and polypropylene production capacity by 75% [7]. - The company has also initiated construction on a 2.6 million-ton coal-to-olefins project in Inner Mongolia, which is expected to contribute significantly to future performance [7]. Future Projections - The report projects that Baofeng Energy will achieve revenues of 38,971 million yuan, 53,584 million yuan, and 61,483 million yuan for the years 2024, 2025, and 2026, respectively. Corresponding net profits are expected to be 8,588 million yuan, 12,425 million yuan, and 14,581 million yuan [7].