HANGYANG LIMITED(002430) -·2025-01-17 02:53Investment Rating - The report maintains a "Buy" rating for the company, with a target price of Rmb30.00 based on a current stock price of Rmb20.00, reflecting a potential upside of 50% [3][5][7]. Core Insights - The company is currently trading at 17x 2025E PE and 9x EV/EBITDA, indicating that the market has largely priced in the challenges related to retail gas ASP and the stalled progress of the gas power merger [3]. - The company expects a sales growth of approximately 20% year-on-year in 2025, primarily driven by volume, with limited downside for ASP [6]. - The management anticipates that the new projects will contribute significantly to the company's operational scale, with a total oxygen production capacity of 270,000 m3/h expected by the end of 2024 [6]. Summary by Sections Financial Performance - Revenue projections show a steady increase from Rmb11.878 billion in 2021 to Rmb26.273 billion by 2028, with a peak expected at Rmb22.978 billion in 2027 [4]. - EBITDA margins are projected to improve from 9.6% in 2024 to 14.4% by 2028, indicating a positive trend in profitability [4]. Market Dynamics - The company has secured new projects with a total oxygen production capacity of 360,000 m3/h for 2024, compared to 230,000 m3/h in 2023, with a significant portion coming from chemical clients [6]. - The management noted a slight decline in pipeline gas utilization since Q1 2024, although it remains above the minimum take-or-pay levels [6]. Equipment Orders - The order size for 2024 is expected to be around Rmb5.5-6 billion, slightly down from Rmb6.5 billion in 2023, with a shift towards smaller-scale equipment orders that typically yield higher margins [6]. Dividend and Cash Flow - The projected dividend per share is expected to stabilize around Rmb0.48 in 2024 and 2025, with a slight increase to Rmb0.54 by 2028 [4]. - The net debt is projected to increase from Rmb2.92 billion in 2023 to Rmb3.47 billion in 2025, indicating a focus on growth investments [4]. Analyst Insights - Analysts expect that the company's strategic focus on pipeline gas and retail gas markets will provide additional revenue and margin opportunities in the medium to long term [6]. - The report highlights that the company’s penetration into the retail bottled gas sector, although slow, could lead to further revenue and margin improvements [6].