Half-year performance is forecast to be poor, and green transformation continues to increase
Construction Investment Energy released a performance forecast. 22H1's net profit loss was 70 million yuan, -150% year on year, and loss was 131 million yuan after deduction, -209% year on year. The main reasons for losses in the first half of the year were: 1) it was difficult for electricity generation to increase dramatically due to the control of the epidemic; 2) the year-on-year increase in the unit price of composite coal was far higher than the increase in feed-in electricity prices and heat prices. The company continued to increase its new energy distribution, increased capital to Jianhao Company at the end of June, and added 660 MW of photovoltaic reserves. Maintaining the profit forecast, the company's net profit for 22-24 is expected to be -4.44/396/471 million yuan, and BPS 5.11/5.33/5.59 yuan. Comparable companies averaged 1.2x PB in '22 (Wind's consistent expectations). The company's high-quality thermal power assets and green transformation strategy were clear. The company was given 1.4xPb in '22, with a target price of 7.15 yuan/share (previous value of 5.11 yuan based on 1.0xPb in '22), maintaining the rating for increasing holdings.
Demand for electricity needs to recover, and the increase in coal prices remains high
Affected by factors such as epidemic prevention and control, electricity supply and demand in Hebei Province were weak. Electricity consumption in January-May was only 1.77% year on year (Wind data), and power generation fell 1.20% year on year (data from the National Bureau of Statistics). In the context of steady economic growth, electricity demand is expected to recover in the second half of the year; the company's generator sets are an important power source support for regional power grids, and power generation capacity is expected to rise when electricity is guaranteed. The increase in coal prices exceeded the increase in electricity prices and heat prices. The 22Q1 company's average comprehensive coal unit price increased 39% year on year, while feed-in electricity prices increased only 22% year on year, and heat prices remained basically the same year on year; it is expected that the year-on-year increase in coal/electricity/heat prices in 22Q2 will continue the Q1 trend.
Increase the deployment of new energy sources and increase photovoltaic reserves by 660 MW
The company stepped up its green transformation and development efforts and revealed the PV filing capacity of 1.64 GW for the first time in the 2021 annual report. On June 30, the company increased its capital to Hebei Jianhao Company by 951 million yuan, holding 49% of the latter's shares. Jianhao Company obtained a PV index of 660 MW in Hebei/Shanxi/Shaanxi, etc., of which 310 MW is under construction and 350 MW is yet to be started. Considering the progress and scale of project construction, the short-term performance increase brought about by the commissioning of photovoltaics is limited, but it is expected that the company's asset structure will improve in the medium to long term.
Maintain profit forecasts and stock growth ratings
Detailed operating data for the first half of the year has not been disclosed, new energy assets will not contribute to short-term performance, and profit forecasts will not be adjusted for the time being. The company's net profit for 22-24 is estimated to be -4.44/396/471 million yuan, and BPS 5.11/5.33/5.59 yuan. Comparable companies averaged 1.2x PB in '22 (Wind's consistent expectations). The company's high-quality thermal power assets and green transformation strategy were clear. It was given 1.4xPb in '22, corresponding to a target price of 7.15 yuan/share (previous value of 5.11 yuan based on 1.0xPb in '22), maintaining the rating for increasing holdings.
Risk warning: Risk of rising coal prices; electricity demand falls short of expectations; progress of projects under construction falls short of expectations.