Incidents:
Datang Power released the first quarter report of 2022:
In the first quarter of 2022, the company achieved operating income of 29.80 billion yuan, an increase of 18.12% over the previous year; realized net profit of -409 million yuan, a decrease of 144.32% over the previous year.
Key points of investment:
The rise in electricity prices hedged the decline in electricity capacity, and the company's revenue increased 18.82% year over year.
1) Volume: 2022Q1's feed-in electricity volume decreased by 2.21% year on year. Among them, photovoltaic power generation increased rapidly. Coal machines/combustion engines/hydropower/wind power/photovoltaic feed-in capacity were 466.1/31.9/50.5/2,79/4.7 billion kilowatt-hours, respectively -2.45%/-10.95%/+2.78%/-1.09% /+44.
21% The main reason for the decline in feed-in electricity consumption was the slowdown in demand for epidemic control in some provinces and regions, the tight supply of natural gas in some regions, and the year-on-year decline in thermal power generation.
2) Price: The 2022Q1 company's average feed-in electricity price was 0.466 yuan/kWh, up 18.39% year on year, up 19.79% from the morning of 2021; the company's market-traded electricity volume was 49349.8 billion kilowatt-hours, accounting for 84.93%, up 19 percentage points from 66.17% of market-traded electricity in 2021.
Losses in the first quarter narrowed month-on-month, and we are optimistic that the thermal power business will improve further in the second quarter. The rise in electricity prices led to a month-on-month narrowing of losses in the first quarter. 2022Q1 achieved net profit of -409 million yuan, a significant improvement from -9.277 million yuan in 2021Q4. In the context of increased coal production and supply, the NDRC recently further clarified the upper limit of medium- to long-term and spot transaction prices for coal, and coal prices will decline to a reasonable range. On May 1, medium- to long-term coal and spot transaction prices began to be implemented. The coverage rate of long-term coal cooperation has been further guaranteed, and the company's coal-fired power generation performance is expected to improve further in the second quarter.
The quality and growth rate of the new energy business is improving, and the installed capacity of new energy is expected to exceed 30 GW in the 14th Five-Year Plan. By the end of 2021, the company's installed capacity was about 68.77 GW, including 47.95 GW of thermal power, 9.20 GW of hydropower, 5.08 GW of wind power, and 1.91 GW of photovoltaics. The company plans to add no less than 30 GW of new energy installations in the “14th Five-Year Plan”. The total capacity of new wind power units put into production in 2021 is 0.77 GW, and the company will add an average of 7.31 GW per year in 2022-2025. New energy installations will usher in rapid growth.
In 2021, the company approved a total of 6 wind power projects (1.86 GW) and 78 photovoltaic projects (4.59 GW). Tuodian and Yuxian bases were approved by the first batch of large-scale scenic bases in the country. In total, 3 GW, the new energy business is expected to drive up the “14th Five-Year Plan” performance.
Profit forecasts and investment rating companies' losses narrowed month-on-month in the first quarter, and they are optimistic about the growth brought about by further improvements in thermal power business and rapid growth in new energy installations in the second quarter. We expect the company's revenue to be 116331/1259.22/132,854 billion yuan respectively in 2022-2025, with a year-on-year growth rate of 12%/8%/6%, respectively, net profit of 22.05/30.93/3.745 billion yuan respectively, and PE for 2022-2024 is 18.88/13.46/11.12 respectively, with initial coverage and a “buy” rating.
The risks indicate the risk of a macroeconomic downturn, the risk of policy changes, the risk of coal price fluctuations, the rise in electricity prices falling short of expectations, and the installation of new energy sources falling short of expectations.