Report summary:
The quality and efficiency of the main business have improved, and profits have improved markedly. In 2018-2022, the company achieved an increase in revenue of 60.27 to 11.118 billion yuan. The company's net profit level increased sharply in 2022 to 854 million yuan, +358.98% year on year. 2023Q1, the company achieved operating income of 3,011 million yuan, +8.49% year on year; net profit of the mother was 237 million yuan, -11.35% year on year.
Power generation and distribution have developed together, and the quality of operation has improved markedly. Annual power generation reached 5.947 billion kilowatt-hours, +6.07% year on year; total market-traded electricity volume was 5.396 billion kilowatt-hours, +12.40% year on year. It has achieved high-quality development in the main power industry, and the highest profit level in history since its inception. In terms of power generation:
The power generation enterprise held by the company, Shanxi Sunshine Power Co., Ltd., has a total installed capacity of 4×320MW cogeneration generator sets; in terms of power distribution: The company is responsible for power supply and distribution in 12 counties (districts) in 3 cities in Shanxi Province. According to the segmented profit split of the company's 2022 annual report, the company consists of three divisions: thermal power generation, power grid distribution and other divisions. Net profit was 0.11/516/326 million yuan respectively.
Green transformation and upgrading are being accelerated to create a platform for asset listing. The company initially plans to select merit and transform into equipment manufacturing business, but the high-end equipment manufacturing industry is still in its infancy, and it is difficult to inject it into listed companies in the short term. Therefore, it is necessary to adjust strategic positioning in a timely manner, terminate equity acquisition of equipment assets, and promote green and low-carbon transformation and development. Jinneng Holding Group supports the company as a listing platform for its “clean energy” capital operation and terminates equity acquisition of equipment assets. At the same time, it responds to the national “dual carbon” policy, actively expands the clean energy business, and comprehensively plans the securitization of the Group's clean energy assets. By the end of 2022, the adjustment of the company's business scope was completed and the company's articles of association were revised to clarify the development path and promote green and low-carbon transformation and development. In the clean energy sector, the Group has operating assets of about 6 million kilowatts, mainly wind and solar power assets in Shanxi Province.
Policies help lay out the clean energy industry and focus on building regional industrial clusters. In April 2023, the Provincial Energy Administration and the Provincial Department of Industry and Information Technology issued the “2023 Action Plan for the Photovoltaic Industry Chain in Shanxi Province”, which clearly stated that by the end of this year, efforts will be made to stabilize the comprehensive production capacity of the photovoltaic industry in the province above 20 GW, and that the “chain extension” and “chain repair” of the industrial chain will be effective.
Profit Forecast: Maintain the company's “buy” rating. We predict that in 2023-2025, the company will achieve operating income of 112.22/125.59/135562 billion yuan respectively, net profit of the mother is 8888/9.39/99.9 billion yuan respectively, and PE will be 11.52x/10.89x/10.24x respectively.
Risk warning: Changes in the international situation have greatly exceeded expectations; the company's power generation and distribution business revenue fell short of expectations; changes in coal investment income exceeded expectations; the clean energy industry injection process fell short of expectations; profit forecasting and valuation models fell short of expectations