Henan Lantian Gas (SH:605368) Zhongyuan Securities·2024-05-19 08:00Investment Rating - The report maintains an "Accumulate" investment rating for the company [7][31]. Core Views - The company has shown steady growth in its natural gas business, with a focus on high dividends [7][31]. - The natural gas consumption in China has significant growth potential, with demand expected to peak around 2040 [9][28]. - The company benefits from a dual business model of long-distance pipelines and city gas distribution, providing stable gas supply and market demand [27][31]. Financial Performance - In 2023, the company achieved operating revenue of 4.947 billion yuan, a year-on-year increase of 4.06%, and a net profit attributable to shareholders of 606 million yuan, up 2.33% [7][26]. - The first quarter of 2024 saw operating revenue of 1.582 billion yuan, a growth of 8.46%, with net profit of 203 million yuan, increasing by 1.94% [7][8]. - The company’s gas installation engineering revenue surged by 71.48% in 2023, driven by increased market development [26]. Profitability and Valuation - The company maintains a gross profit margin of 20.01% and a net asset return rate of 16.58% [4][7]. - The projected earnings per share (EPS) for 2024, 2025, and 2026 are 0.92 yuan, 0.98 yuan, and 1.05 yuan respectively, with corresponding price-to-earnings (PE) ratios of 14.45, 13.54, and 12.64 [31][51]. - The company has a strong dividend policy, with cash dividends accounting for over 97% of net profit in 2023 [31][45]. Market Position and Competitive Advantage - The company is the only listed natural gas operator in Henan province, providing it with a unique market position [26]. - It has established long-term gas supply agreements with major suppliers, ensuring stable gas sources [30][45]. - The company is well-positioned to benefit from the ongoing adjustments in natural gas pricing mechanisms across various regions [30][44].