Research Report Nuggets | Huaxin Securities: Initiates "Buy" Rating on Baofeng Energy, Leading Polyolefin Producer Builds High Growth Through "Volume Over Price"

NightAirdropper · 2026-03-18T07:12:19+00:00

Huaxin Securities points out that Baofeng Energy achieves high-growth performance through increased polyolefin product sales and capacity release from its Inner Mongolia base, with total polyolefin production capacity expected to reach 5.7 million tons/year by 2026. Meanwhile, the company possesses significant cost and technology advantages and will benefit from industry supply-demand improvements. Net profit attributable to parent company is expected to grow continuously during 2026-2028, with a "Buy" investment rating given.

NightAirdropper

2026-03-18 07:12:19

Abstract generation in progress

Gelonghui March 17 | Huaxin Securities Research Report points out that Baofeng Energy, a leader in polyolefins, builds high growth in performance by “using volume to compensate for price.” The company’s performance growth by 2025 is mainly attributed to increased sales of polyolefin products, with the release of capacity at the Inner Mongolia base being the key incremental factor. In terms of cash flow, the high increase in production and sales drives receivables up, with net cash flow from operating activities reaching 8.939 billion yuan, an increase of 8.703 billion yuan compared to the same period last year. The company’s Ningdong Phase IV 500,000-ton/year polyolefin project is progressing steadily and is expected to start production in 2026. At that time, the company’s total polyolefin capacity will reach 5.7 million tons per year, further strengthening its leading scale advantage. Additionally, leveraging the two major bases in Ningdong and Inner Mongolia, the company has built a complete “coal-olefin-chemical” circular economy industry chain. With advantages in location, technology, and cost (investment and operating costs over 30% lower than industry peers), it remains resilient in profitability despite industry supply-demand imbalances. After 2026, the growth rate of new polyolefin capacity is expected to slow down, coupled with the exit of high-cost overseas capacity, which may improve the supply-demand pattern. As a cost-competitive leader in coal-based olefin production, the company will benefit fully from industry recovery and capacity release, opening up growth potential. The forecast for the company’s net profit attributable to parent from 2026 to 2028 is 14.125 billion, 15.688 billion, and 17.405 billion yuan respectively, with current stock prices corresponding to P/E ratios of 17.7x, 16.0x, and 14.4x, respectively, and an “Buy” investment rating.

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