26/05/2020

Shenzhen Gas (601139): Natural Gas Price Rising Leads to Supply and Demand Advantages

Shenzhen Gas (601139): Natural Gas Price Rising Leads to Supply and Demand Advantages

The event entered the heating season throughout the country. In October, the national natural gas price rose by 18%, and the ex-factory price of LNG in some areas exceeded 4,800 yuan / ton, and the industry’s prosperity improved.

It is expected to boost the company’s performance growth.

Operational analysis In the first three quarters, the sales of natural gas increased, and the top of the city gas leader was solid: the company’s high-margin pipeline business continued to grow steadily, and the sales of natural gas in the first three quarters were 22.

5.8 billion cubic meters, 21 over the same period last year.

1.7 billion cubic meters increased by 6.

67%, of which the sales volume of plant natural gas increased in the third quarter, and fell from the first two quarters17.

10% increase to ten years growth2.

22%, sales of non-plant natural gas 15.

4.5 billion cubic meters, compared with the same period last year14.

1.9 billion cubic meters increased by 8.

87%.

Shenzhen has ample room for gas increase and the company’s upstream gas source advantages expand: the company has significant advantages in both supply and demand.

Demand side Shenzhen gas downstream market has ample room for increase. ①The transformation of urban villages has accelerated and the gasification rate in Shenzhen has been greatly increased. It is estimated that new residential gas consumption will be added in 19-20.

7 billion cubic meters; ② The long-term growth of local plant gas consumption is considerable. The gas sales volume of power plants in the past three years has a CAGR of 36%, and several new projects have been put into operation in 20-21.The project has continued to expand, with 40 franchise rights, a 5-year CAGR of 28% for off-site gas sales, and a user share increase to 38%.

Supply-side company gas source cost barriers are prominent. ① PetroChina West Second Line Shenzhen-Hong Kong Line natural gas is directly sent to Shenzhen, without going through the Guangdong Province pipeline network, saving pipeline network costs, reducing gas purchase costs; ② The company shares in Guangdong Dapeng to obtain the cheapest LNG in China One of the imported gas sources; ③ The company’s LNG receiving station has been put into production in August 2019, consolidating the low gas source price advantage.

National Petroleum and Natural Gas Pipeline Network Company is about to be listed, which is good for city gas companies: The National Petroleum and Natural Gas Pipeline Network Company that will be listed in 2019 will completely change the long-term vertical integration of the natural gas market in the next few years.The natural gas industry has entered the “N + 1 + N” operating model, boosting pipeline construction, and promoting the replacement of natural gas supply to a safer and more efficient development.

As a city gas leader, the company is expected to benefit from it.

Investment advice we predict company 2019?
In 2021, the operating income will be 143.164 billion, and the net profit attributable to mothers will be 11.

1/13.

7/16.

40,000 yuan, the corresponding EPS is 0.

39/0.

48/0.

57 yuan, the current expected corresponding P / E is 22/18 / 15X, taking into account the company’s leading position and the city gas sector estimate, we give 25 times the PE estimate, 2.

5 times PB estimate, raise the target price to 9.

75. Maintain “Buy” rating.

Risks suggest fluctuations in domestic natural gas prices; intensified upstream gas source 杭州桑拿网 growth; policy changes or implementation failures to meet expectations; changes in the “urban village” transformation progress; reduced power plant utilization hours; and lifting of restricted stocks