Thread Content
Baofeng Energy’s net profit surged by over 70% in the first half of the year, as it embarks on a path focused on hydrogen energy. On the evening of August 9, Baofeng Energy released its semi-annual report for 2021. In the first half of the year, the company achieved operating revenue of 10.467 billion yuan, a year-on-year increase of 39.18% ； The net profit was 3.733 billion yuan, representing a year-on-year increase of 78.46%. In the face of the COVID-19 pandemic and the complex changes in the domestic and international economic landscape, Baofeng Energy has managed to withstand the impact of extremely low oil prices last year as well as the pressure of extremely high coal prices this year, achieving double-digit growth in both its operating revenue and net profit. A representative from Baofeng Energy told a reporter from the Securities Daily that, in the face of numerous external uncertainties, the company has managed to accurately assess the situation, respond scientifically, and take proactive steps to adapt. Its production operations remain safe and stable, emissions levels are kept at extremely low levels in line with environmental standards, and carbon reduction measures have been put into effect, enabling the company to move forward on a path of higher-quality green development. In its semi-annual report, Baofeng Energy also emphasized that the company will continue to invest in technological innovation and accelerate the transition to renewable energy sources. It aims to achieve a 50% reduction in carbon emissions within 10 years, and to reach carbon neutrality within 20 years, thereby contributing actively to the achievement of the **\"dual carbon\" goals and to sustainable, high-quality development. “Its “hematopoietic” capacity continues to grow; compared to when it went public in 2019, Baofeng Energy’s semi-annual net profit has nearly doubled, and the quality of its earnings has also improved significantly. In the first half of the year, the company’s gross margin reached 51.59%, an increase of 11.4 percentage points compared to the previous year ； Net operating cash flow was 3.517 billion yuan, representing a year-on-year increase of 36.87% ； The debt-to-asset ratio is 32.71%, a decrease of 1.94 percentage points compared to the previous period; this figure, which is at a level above that of the industry, confirms the company’s growing ability to generate its own funds. In the first half of 2021, Baofeng Energy also achieved several operational breakthroughs. The semi-annual report shows that in terms of production, the company has reduced the material consumption per unit of product through various measures. The coal-to-methanol ratio for the second phase of methanol production decreased by 4.71% compared to the previous year, which equates to a savings of 74,000 tons of standard coal. The alcohol-to-olefin ratio dropped to 2.868 t/t, resulting in savings of nearly 20,000 tons of methanol. This approach enables true \"carbon emission reduction\" by addressing the issue at its source. Through various technological advancements and the implementation of environmental protection and energy-saving projects, the propane recovery rate increased by 68.91%, further reducing the unit production cost ； In terms of product transformation and upgrading, multiple new types of coke have been developed to minimize the impact of fluctuations in coal prices; by seizing the upward trends in the coke market, benefits are achieved both from new products and from new mixing ratios ； The company has become the first in China to successfully produce metallocene products using the double-loop HDPE process, which is expected to accelerate the substitution of imported products ； Performance of 4 olefin grades was optimized, and multiple new products were introduced ； The company’s third-phase olefin project has the capability to produce EVA products, utilizing Basel high-pressure tubular EVA technology; it can be used to manufacture photovoltaic EVA film, offering broad prospects for the future. It is worth noting that the company also seized market opportunities to engage in the export of polyolefin products, thereby expanding its market channels. A research report by GF Securities states that Baofeng Energy is a model enterprise for a coal-based integrated production circular economy, boasting significant cost advantages in various aspects such as investment and operation; it will benefit greatly in the short term from the performance improvements resulting from rising prices of polyolefins and coking products. In the medium to long term, as multiple projects are gradually completed and brought into operation, the company will have significant potential for growth in terms of business scale and profitability. Policies are favorable to the development of hydrogen energy. In addition to its traditional coal chemical business, Baofeng Energy is also accelerating its efforts in hydrogen energy development, aiming to become a leader in achieving carbon neutrality. On August 11, the Ministry of Industry and Information Technology stated in its response to Proposal No. 5736 from the 13th National People’s Congress that it would go ahead and work closely with relevant departments to formulate a development strategy for hydrogen energy, exploring ways to include hydrogen internal combustion engines as part of this strategy to provide support for them. “Developing hydrogen internal combustion engines can further boost demand for hydrogen energy. ”Zhang Xiang, a researcher at the Automotive Industry Innovation Research Center of North China University of Technology, told a reporter from Securities Daily. According to the projections of the China Hydrogen Energy Alliance, by 2030, China’s demand for hydrogen will reach 35 million tons, accounting for 5% of the total final energy consumption. By 2050, hydrogen is expected to account for at least 10% of China’s final energy mix; the demand for hydrogen will be around 60 million tons, which could lead to a reduction of approximately 700 million tons of carbon dioxide emissions. The annual value of the related industrial chain is estimated to be around 12 trillion yuan. As a leader in the modern chemical industry, Baofeng Energy was one of the first companies to invest in hydrogen energy. The company actively implements the major strategic initiatives of \"reaching carbon peak and achieving carbon neutrality.\" By relying on technological innovation and focusing on prevention at the source, it promotes the replacement of fossil fuels with renewable energy. It has built a \"comprehensive demonstration project for hydrogen production via solar electrolysis,\" which is capable of producing 240 million cubic meters of green hydrogen and 120 million cubic meters of green oxygen per year. This makes it the largest hydrogen production project of its kind in the world, both in terms of plant scale and individual unit capacity. The first batch of units for the project was put into operation in April this year, with all units to be operational by the end of 2021. For the first time, this project supplies \"green hydrogen\" and \"green oxygen\" directly to chemical manufacturing facilities; green hydrogen is used as a substitute for coal-based raw materials, while green oxygen replaces coal fuel in the production of high-end chemical products. This approach creates a scientific pathway to achieve \"carbon neutrality\" by replacing fossil fuels with renewable energy, paving the way for enterprises to attain carbon neutrality. The goal is to reduce carbon emissions by 50% within 10 years, and to become an industrial enterprise that achieves carbon neutrality first by 20 years. CITIC Securities states that, under the goals of achieving carbon peak and carbon neutrality, the emerging applications of hydrogen in various sectors are going through a period of breakthroughs from scratch, and the number of central state-owned enterprises and listed companies that are investing in the hydrogen sector is also increasing rapidly. It is believed that leading companies in the energy and chemical sector that began their transformation earlier will have an edge in terms of financial strength, investment in research and development, and resource integration; thus, Baofeng Energy, which is actively expanding its activities in photovoltaic hydrogen production, is recommended.