Core ideas:
The dry water in the flood season is a drag on the performance, and the Q3 performance is-64% year-on-year. The company released its three-quarter report for 2022, with revenue of 20.2 billion yuan (year-on-year + 24.8%) in the first three quarters and net profit of 1.8 billion yuan (- 32.9%), of which Q3 returned net profit of 392 million yuan (year-on-year-63.7%). The rise in coal trade volume and prices led to income growth, while the drying up of Q3 water led to a decline in hydropower profits. The company's hydropower and thermal power business has abundant cash flow, and the net operating cash flow in the first three quarters is + 32.6% compared with the same period last year.
Hydropower power generation declined compared with the same period last year, while the growth rate of thermal power generation rebounded. Q3, the water from Qingjiang River has dried up sharply, and the discharge of Shuibuya Hydropower Station has decreased by about 90% over the same period last year. As of October 26, the water level of Shuibuya was only 369m (21 meters lower than that of the same period last year), and the company's hydropower generation capacity was 1.488 billion kilowatt-hours (- 69.3% compared with the same period last year). The growth rate of thermal power generation has rebounded, and Q3 has achieved 6.835 billion kilowatt-hours (+ 31.1% compared with the same period last year). It is expected that the profit of thermal power will continue to improve under the stable price of Changxie coal supply. At the same time, there is still a lot of room for growth in thermal power installation (as of 2022Q3 installed 4.63GW), Xiangyang Yicheng Thermal Power Plant (2GW) is expected to be put into production in 2023, and signed the Ezhou Power Plant Phase IV expansion Project (2GW).
The power generation of new energy projects connected to the grid has increased rapidly, and the construction of pumped storage power stations has been accelerated. The company plans to add new new energy installed 2.08GW in 2022, speed up production in the second half of the year, and complete 1.194 billion kilowatt-hours of new energy generation in the third quarter (+ 66.3% compared with the same period last year). The company plans to have a total installed capacity of 22GW at the end of the 14th five-year Plan, of which renewable energy is more than 15GW, and new energy is expected to add more than 8GW (CAGR reached 45.3% from 2021 to 2025). At the same time, the company actively promotes the construction of pumped storage projects, and has stored a total of 4 projects to install 6.2GW, of which Luotianping Tanyuan project is in the preparatory stage, and Changyang Qingjiang project has been approved.
Profit forecast and investment advice. It is estimated that the company's net return profit in 2022 to 2024 will be 20.2x26.0 yuan / 3.2 billion yuan respectively, and the PE corresponding to the latest closing price will be 8.8 times as much as 14.0Unix 10.8max.
The company makes complementary profits from hydropower and thermal power, and there is a lot of room for new energy + pumped storage to grow. In September, the company completed the first batch of reserved restricted stock incentives and actively promoted buybacks. With reference to the industry, the company is given a valuation of 18 times PE in 2022, corresponding to the reasonable value of 5.52 yuan per share and maintaining a "buy" rating.
Risk hint. The project construction is not as expected; the incoming water fluctuates; the coal price rises sharply and so on.