TRE(300332)2024-07-16 02:10Summary of the Conference Call on Tianhao Energy Industry Overview - The conference focused on the natural gas industry, specifically the gas sector, highlighting its significant value proposition in terms of profitability, growth potential, and cash flow stability [1][2][3]. Key Points and Arguments 1. Market Dynamics and Pricing Reform - The gas sector is undergoing a market-oriented pricing reform similar to that seen in the electricity sector, which is expected to stabilize profitability [1]. - The effective asset return rate for the gas industry is set at 7%, which is projected to surpass the return on assets (ROA) of the electricity sector, indicating a potential for better valuation [2]. 2. Growth Potential - The gas sector has substantial room for growth, with a projected annual growth rate of 8-9% until 2030, driven by increasing penetration rates, especially in the industrial and commercial sectors [3][5]. - The current penetration rate in China is significantly lower than the global average, suggesting a doubling potential [3]. 3. Cash Flow Analysis - The cash flow metrics for the gas industry are favorable, with net cash ratios consistently above 1.6 and free cash flow to profit ratios greater than 1, indicating strong operational efficiency [6]. - Comparatively, the gas sector is undervalued relative to other sectors, such as nuclear power, by over 40% [5][6]. 4. Industry Valuation - The gas sector is expected to see a valuation increase from a price-to-earnings (P/E) ratio of 1-1.5 times to 2 times, reflecting its core assets' potential, such as Tianhao Energy's long-term lease assets [6][9]. 5. Tianhao Energy's Position - Tianhao Energy is strategically positioned in the midstream segment of the natural gas supply chain, facilitating the transition from upstream resources to downstream consumers [10]. - The company has a unique cross-province pipeline asset that enhances its operational capabilities and market reach [14][24]. 6. Operational Performance - In 2023, Tianhao Energy reported a revenue growth of 19.6%, with a significant increase in gas volume sold, reflecting a robust operational performance despite fluctuations in gas prices [17][19]. - The company aims to exceed 20 billion cubic meters in gas volume for 2024, representing a 30% increase from the previous year [21][23]. 7. Future Outlook - The company is actively expanding its upstream resource acquisition and downstream customer base, which is expected to support its growth trajectory [22][23]. - The long-term value of Tianhao Energy's core assets is anticipated to be realized as the gas consumption in China continues to rise, particularly in regions with high demand [14][31]. Additional Important Insights - The gas sector's competitive advantage lies in its cost structure, with domestic gas prices significantly lower than imported gas prices, enhancing its market position [27][36]. - The company is also focusing on diversifying its resource base by collaborating with various upstream partners, including CNOOC and PetroChina, to secure stable gas supplies [29][30]. - The overall economic recovery and increasing industrial demand are expected to drive gas consumption growth, positively impacting Tianhao Energy's profitability [39][40]. This summary encapsulates the critical insights from the conference call regarding Tianhao Energy and the broader natural gas industry, highlighting the company's strategic positioning and growth potential.