Guoxin Securities·2024-04-30 02:00Investment Rating - The report maintains a "Buy" rating for the company [1] Core Viewpoints - The company has established a strategic plan for three trillion-cubic-meter gas zones, with clear production increase pathways. The South China Sea gas zone, Bohai gas zone, and the land-based E'erduosi-Qinshui gas zone are projected to have proven reserves of one trillion cubic meters each. The South China Sea gas zone is expected to be completed around 2025, the land-based E'erduosi-Qinshui gas zone by 2028, and the Bohai gas zone by 2030 [2][21][40]. Summary by Relevant Sections Natural Gas Demand and Consumption - China's natural gas demand is expected to maintain a rapid growth rate, with consumption projected to peak around 2040, reaching between 422 billion to 751 billion cubic meters [20][39]. The average realized price of natural gas for the company in 2023 was approximately $7.98 per thousand cubic feet, equivalent to about ¥2.00 per cubic meter [66]. Industrial and Residential Use - Natural gas is primarily used in industrial applications such as metallurgy, ceramics, and food processing, where it offers advantages like rapid heating and high-temperature control. The residential gas consumption is closely linked to urbanization, with the urbanization rate expected to reach 70% by 2030, driving demand for natural gas [7][8]. Transportation Sector - The LNG heavy-duty truck market is showing significant growth, with sales reaching 152,000 units in 2023, a 307% increase year-on-year. The penetration rate of LNG in heavy-duty trucks reached 16.7% [11]. The economic advantages of LNG over diesel are evident, with substantial fuel cost savings projected [13]. Power Generation - The demand for natural gas in power generation is expected to grow rapidly due to the transition to low-carbon energy sources. By 2025, the demand for natural gas in power generation is anticipated to reach 80 billion cubic meters [16]. The competitiveness of gas-fired power generation is expected to improve significantly as natural gas prices stabilize [36]. Chemical Industry - The chemical sector's natural gas consumption is expected to grow slowly due to policy restrictions. However, the development of hydrogen energy is likely to drive natural gas consumption in this sector [17][18]. Exploration and Production - The company has made significant discoveries in the South China Sea, with proven natural gas reserves exceeding 8 trillion cubic meters across three major basins. The Bohai Sea is also a critical area for the company's natural gas production and reserves [43][44]. The company has established production bases in the Ordos Basin and is developing technologies for coalbed methane and tight gas exploration [27]. Future Outlook - The company forecasts net profits of ¥149.8 billion, ¥156.4 billion, and ¥163.3 billion for 2024-2026, with corresponding EPS of ¥3.15, ¥3.29, and ¥3.43, maintaining a "Buy" rating based on these projections [69].