CNCEC(SH:601117) Guotai Junan Securities·2024-05-10 11:02Investment Rating - The report maintains a rating of "Buy" for China Chemical (601117) with a target price of 11.00 CNY, reflecting a potential upside from the current price of 7.60 CNY [3][4]. Core Views - The company is expected to benefit from rising chemical prices and improved industry demand, with a projected 1% increase in new contracts to 330 billion CNY and an 8.8% increase in total revenue to 195 billion CNY for 2024 [2]. - In Q1 2024, new contracts increased by 22%, with overseas contracts surging by 240%, indicating strong growth momentum [2][8]. - China Chemical holds a dominant market position in the coal chemical sector domestically and is a leader internationally, with significant market shares in chemical and petrochemical sectors [2]. - The company is expanding into high-value new materials and has successfully launched several projects, including ethylene glycol and phase change materials, with plans for further development in biodegradable plastics and high-performance fibers [2][7]. - The company is involved in major overseas projects, including the largest integrated ethylene project in Russia, and has secured contracts worth 8.18 billion CNY for fertilizer projects in Egypt [2][7]. Summary by Sections Financial Projections - The report forecasts EPS growth of 10% in 2024, 9% in 2025, and 8% in 2026, with projected EPS of 0.98, 1.07, and 1.15 CNY respectively [2]. - The company aims for a profit total of 7.4 billion CNY in 2024, reflecting a 7.2% increase [2]. Market Position - China Chemical is recognized as a national leader in the oil and chemical engineering sector, maintaining the top position globally in oil and gas services [2]. - The company is focusing on expanding its core business in high-value new materials, with ongoing projects expected to contribute positively to cash flow [2][7]. Recent Performance - In March 2024, manufacturing investment increased by 10.3% year-on-year, with chemical investment specifically rising by 10.4% [2]. - The company’s order book reached 3.268 billion CNY in 2023, with a growth rate of 10.1% expected for 2024 [7][8].