With the support of high-growth performance, can Zhongyu Gas (03633) succeed in breaking through the box top this time?
Zhitong Finance APP learned that Zhongyu Gas released an interim results announcement on the evening of August 22, stating that the company achieved operating income of approximately HK$4.322 billion (the same unit below) in the first half of 2019, a year-on-year increase of 16.8%. The company has Net profit attributable to employees increased by 20.8% year-on-year to 507 million yuan, achieving basic earnings per share of 19.99 Hong Kong cents. It plans to pay an interim dividend of 2 Hong Kong cents per share.
In terms of the secondary market, the share price of Zhongyu Gas has risen sharply by 60% to around 8 yuan since the end of 2018, and has been moving within the range of 7-8.3 yuan. Even if it is dragged down by macroeconomic factors, it has not experienced much growth. callback. Recently, the company's stock price has risen for five consecutive trading days since August 16, approaching the top of the box again. Although the stock price performed poorly on the first trading day after the results were released, there is a high probability that the stock price will not rise above the top of the box. was broken, because the part of the information that was concealed in this interim results answer sheet can improve the market's pessimism to a great extent.
Quotation source: wind information
Short-term explosion or long-term stability, Zhongyu chose the latter.
Sustainable business is growing, and explosive business makes concessions for long-term stability. Zhitong Finance APP learned that in the first half of 2019, it benefited from the 25.4% year-on-year sales volume of natural gas to 912 million cubic meters, as well as the gas prices for residential users, industrial customers, commercial customers and wholesale customers. All increased, causing the gas sales business revenue, which accounted for the largest proportion of revenue, to increase by 28.1% year-on-year to 2.882 billion yuan, the revenue share increased by 5.9 percentage points to 66.7%, and the segment profit contribution increased by 30.82% year-on-year to 234 million yuan. .
The most eye-catching value-added business growth is because the company has focused on exploring this market since 2017. Currently, the company's own brand Zhongyu Phoenix covers 9 major categories such as range hoods, gas stoves, gas water heaters, and gas wall-mounted boilers. Value-added service products, stoves and other services in the first half of 2019 Service sales revenue reached 252 million yuan, a significant increase of 231.9% compared with the same period last year, and the revenue share increased by 3.8 percentage points to 5.8%. Since the stove with a slightly lower profit margin in the product structure is the fastest growing, the profit of this business segment The contribution growth rate was slightly lower, but still increased significantly by 131.43% year-on-year to 77.29 million yuan.
At the same time, the company operates the compressed/liquefied natural gas vehicle filling station business. Although the revenue decreased slightly by 4% to 169 million yuan, the segment profit contributed increased significantly by 66.77% to 3.87 million yuan; the liquefied petroleum gas sales business operation Revenue also increased slightly to 3.61 million yuan, and segment profit contribution also turned from a loss in the same period last year to a small profit. From this point of view, the company's ongoing business operations are actually improving.
The gas connection business, which has the greatest impact on profits, is actually a choice made by Zhongyu for long-term stability. data shows that the company's gas pipeline construction business revenue contribution fell 14.9% year-on-year to 1.015 billion yuan, and segment profit contribution fell 19.2% year-on-year to 626 million yuan. It is the business segment that has the greatest impact on the company's profits. What dragged down the performance of this business was the revenue from the “coal-to-gas” project under the residential user category, which fell sharply by 32.6% year-on-year to 547 million yuan.
Zhitong Finance APP learned that because the company’s new coal-to-gas users increased significantly by 300% to 445,000 households last year, the overall base is very high; at the same time, because the business in rural areas of the coal-to-gas switch is not only much higher than Each investment brings Financial pressure, but also the later safety and maintenance costs caused by the distance between households, as well as the geological conditions in hilly areas, so the company began to only choose high-quality projects to do, and actively gave up the long-term unstable parts, which led to the gas connection. The growth of the barge business has slowed down. Currently, the number of residential users under the company's coal-to-gas project has dropped 36.7% year-on-year to 156,000, but the average connection fee has increased 13.3% year-on-year to 3,037 yuan. Moreover, for residential users in non-coal-to-gas projects and non-residential users, Both benefited from the increase in volume and price, achieving year-on-year growth of 23.8% and 15.7% respectively to 402 million yuan and 66.38 million yuan, which is quite good performance.
In summary, the overall business performance of Zhongyu Gas is not bad. Coupled with changes in financial expense rates and exchange gains, the company finally achieved a substantial year-on-year increase of 20.8% in net profit attributable to shareholders to 507 million yuan. Even after deducting After exchange gains, the company's adjusted net profit attributable to shareholders of RMB 517 million still achieved a year-on-year growth of 1%.
And looking to the future, the company still has the potential to improve both performance and valuation.
With the cornerstone of stable performance and the potential to exceed expectations, the company can expect
gas sales growth to be higher than that of its peers in the future, while the company's operating projects continue to increase. Zhitong Finance APP learned that gas companies that followed the company in reporting performance include Xinao Energy (02688) and Tianlun Gas (01600). However, Xinao and Tianlun gas sales were 15.1% and 22.5% respectively. The growth rate is lower than Zhongyu’s 25.4%, and the company is still actively looking for high-quality projects for acquisition and acquisition. As of the end of June 2019, the company already had exclusive operating rights for 65 gas projects. During the reporting period, it continued to add 5 new operating locations. Among them, it obtained 4 additional natural gas project concession rights in Henan and Hebei provinces, which is enough to ensure that the company The gas sales business continues to grow at a high rate.
At the same time, the company's gas connection business has the potential to exceed market expectations. data shows that at the end of the company's reporting period, the company's connected population and the number of connected residential users recorded year-on-year increases of 34.7% and 34.8% respectively, and the cumulative number of connected residential users accounted for the total number of connected residential users from 69.2 % dropped to 66.8%, which means that the gas connection business space that Zhongyu can tap is actually increasing significantly. Moreover, due to the recent reduction in electricity prices and the reduction in environmental protection pressure in some northern provinces, the government's efforts to promote "coal-to-gas" have actually weakened. However, with the advancement of the second round of environmental protection inspections, the resurgence of scattered coal at the beginning of the year It is expected to see improvement, and the promotion of coal-to-gas conversion is expected to pick up. In this context, Zhongyu's subsequent gas connection business may perform well, which will not only bring about performance growth, but also hope to reverse the current low market consensus expectations.
In summary, the continuous improvement of the stable and sustainable operating business can not only improve market expectations in a short period of time, but also ensure the growth foundation of Zhongyu’s long-term performance. The gas connection business with strong pessimism is also more likely to Davis has brought double-clicks on Zhongyu’s valuation and performance. Therefore, it seems that the company’s stock price has the momentum to break through the top of the box, and it can focus on higher value.
