1. Basic situation of the company Xichang Electric Power's main business is “hydroelectric power generation+power grid operation”. It has 6 directly subordinate hydroelectric power plants and 1 holding hydroelectric power plant, with a total installed capacity of 99,400 kilowatts, and its business area is Liangshan, Sichuan. Looking back at 2009, some of Xichang Electric Power's announcements deserve our attention: First, the company's large guaranteed debt problem was further resolved in 2009, and its final guarantee balance fell from 525 million yuan (211% of net assets) at the end of 2008 to 72.4 million yuan (18% of net assets) at the end of 2009. Second, after the majority shareholder of the company changed to the Sichuan Electric Power Company, there is still a possibility of further asset restructuring in the future, even though an attempt at restructuring failed in 2009. 2. Financial statement analysis 1. In terms of revenue, in 2009, Xichang Electric Power achieved sales revenue of about 400 million yuan, an increase of 1.4% over the previous year, mainly due to an increase in electricity volume. The integrated feed-in electricity price has declined compared to 2008. It is estimated that this may be because the company's hydropower generation volume in the Fengshui period in the 2009 Fengshui period was relatively good, so the company's electricity sales volume during the Fengshui period accounted for a relatively large amount throughout the year, thus lowering the average price for the whole year. 2. In terms of profitability, since Xichang Electric Power is a regional power grid, the main profit model is to earn the price difference between electricity sales prices and feed-in tariffs, so changes in the electricity sales structure and power purchase structure determine the trend of its gross margin. As can be seen from the changes in gross margin in each quarter since 2007, the company's gross margin is similar to that of hydroelectric power companies. The gross margin was slightly lower during the dry period in the first and fourth quarters, and the gross profit was higher in the second and third quarters due to better water intake. 3. In terms of financial expenses, in 2009, Xichang Electric Power's financial expenses fell to 29 million yuan, a year-on-year decrease of 29%. On the one hand, this is due to a decrease in the amount of interest-bearing debt; on the other hand, the company's weighted capital costs have declined due to bank loan interest rates. 4. Main financial indicators Since most of the debt guarantee issues of Xichang Electric Power were resolved in 2009, after agreeing on payment amounts with creditors, companies with profitability indicators performed well in various financial indicators. But in fact, in 2009, after deducting non-recurring profits and losses, the net profit realized by the company fell 28% year over year. Judging from the projects under construction, the main projects are concentrated in the Muli River and Yongning River basins. 3. Investment opportunities - future performance growth points and ratings Xichang Electric Power and the Yanyuan County Government jointly funded the establishment of Xiyuan Electric Power in 2010. The company held 85% of the shares to develop the Yongning River Level 1, Level 2, Level 4, and Level 5 power stations. In the future, with the further cancellation of the guaranteed debt, the company's own financing capacity will gradually recover. However, judging from the Dashawan and Yongning River Phase IV projects in which Xichang is currently involved, the project capital required is 460 million yuan, while the company's monetary cash balance at the end of 2009 was only 24 million yuan, and the operating cash flow was 174 million yuan. After deducting the guaranteed loan agreed to be repaid, the actual capital that can be used for foreign investment is limited, so it is worth paying attention to how the company will finance in the future. The future development of Xichang Electric Power will inevitably require the support of major shareholders from various sources, and the subsequent settlement schedule, funding sources for the commissioning of the power plant project, and the progress of the project still require further communication with the company to give it a neutral rating for the time being.