The company's net profit in the first three quarters was 780 million yuan, down 91.4% compared with the same period last year, which was in line with expectations, of which the net profit of 3Q2021 was-3.5 billion yuan, mainly due to the sharp rise in fuel costs. Considering that coal power is under pressure due to fuel costs for the whole year, the net profit forecast for 2021 to 2023 will be reduced to-100 million yuan in 71-53-78. Look forward to the subsequent rise in electricity prices, coal prices and scenery growth to lead to performance improvement, to maintain the A & G H-share "buy" rating.

The first three quarters of EPS-0.05yuan, the performance is in line with expectations. In the first three quarters of 2021, the company's operating income was 145.01 billion yuan, an increase of 19.0% over the same period last year; the net profit returned to its mother was 780 million yuan, down 91.4% from the same period last year, corresponding to EPS-0.05 yuan, down 110.0% from the same period last year. Quarter by quarter, operating income in the third quarter was 49.89 billion yuan, up 16.8% from the same period last year; net profit from home was-3.5 billion yuan, down 203.1% from the same period last year; and corresponding to EPS-0.26 yuan, down 244.4% from the same period last year.

The strong demand for electricity drives the volume and price of the power generation side to rise. The electricity demand of the whole society remained high in the first three quarters. The company sold 323.12 billion kilowatt hours of electricity, an increase of 17.1% over the same period last year, which was higher than the growth rate of electricity consumption of the whole society in the same period. Coal electricity sales were 284.65 billion kilowatt hours, an increase of 14.5% over the same period last year. Scenery benefited from rush installation, a total of 16.91 billion kilowatt hours, an increase of 48.6% over the same period last year. Electricity generated by market-oriented transactions accounted for 59.99%, up 3.05 percentage points from the same period last year. Under the tight situation of power supply and demand, the benchmark electricity price rose in many places, the transaction price gradually increased, and the electricity price of the superimposed scenery rush installation project was relatively high. the company's average online electricity price in the first three quarters was 417.8 yuan per megawatt-hour, an increase of 1.28% over the same period last year, and the growth rate was 0.78% higher than that in the second quarter.

The performance of the coal and power sector is under pressure, and electricity price adjustment is expected to be rescued. Since the beginning of this year, the relationship between domestic coal supply and demand has been extremely tense, and thermal coal prices have continued to rise. Qinhuangdao 5500 kcal thermal coal price 1Q/2Q/3Q2021 rose 29.0%, 56.9%, 56.2%, respectively, compared with the same period last year, resulting in a sharp increase in fuel costs in the first three quarters of the company compared with the same period last year. 1Q/2Q/3Q2021 's gross profit margin fell 2.2%, 10.9%, 22.3% to 16.6%, 9.6%, 2.8%, respectively. The cost of coal electricity is expected to exceed the feed-in price. Recently, the benchmark of coal and electricity prices has been floated in many places, and the National standing Committee has expanded the range of electricity prices to 20%, and the cost of coal prices has shifted from the digestion of the power sector to the sharing of the whole society, which is expected to relieve the hardship of coal and electricity. Considering that most of the company's market-oriented trading electricity is locked in advance through the annual long-term Association, it is expected that the performance of the company will still be under pressure in the fourth quarter, and the follow-up is expected to improve with the increase in the transaction electricity price and monthly transaction electricity price of the long-term Association in 2022.

We will continue to increase the size of landscape investment and steadily promote the distribution of clean energy. As of 3Q2021, the installed capacity of the company's holding scenery has reached 918.5 to 29.80 million kilowatts respectively. Under the pressure of the coal power plate, the advantages of stable and predictable scenery performance are gradually highlighted, and the importance in the company's profit structure is gradually increasing. We expect that during the 14th five-year Plan period, the company will add a new installed 40GW, contribute to the performance increment and reduce the volatility of ROE, and look forward to the rapid growth of the landscape sector under the downward trend of cost.

Risk factors: coal prices rose sharply; electricity prices rose by a limited margin; new energy was installed and put into production less than expected; the rate of return of Fengguang project was lower than expected.

Investment advice: considering that fuel costs have risen sharply since the beginning of this year, we have lowered our 2021-2023 EPS forecast-0.62 EPS 0.17 pound 0.33 yuan (the previous forecast is 0.18 pound 0.29 pound 0.46 yuan), the current price corresponding to A-share dynamic PE is-11-41-21 times, H-share dynamic PE is-5-18-9 times. We look forward to the follow-up decline in high coal prices and an increase in the outlook to improve profits. With reference to the historical valuation of the industry and the company, we give Amax H shares 2.0 / 0.8 times the target PB, corresponding to the target price of RMB8.00 / HK $3.90 respectively, all maintain a "buy" rating.