From January to September 2009, the company achieved operating income of 2.414 billion yuan, an increase of 7.96% over the same period last year; operating profit of-446 million yuan, an increase of 26.69% over the same period last year; and net profit of owners belonging to the parent company of-448 million yuan, an increase of 28.35% over the same period last year.
Among them, in the third quarter, the operating income was 1.287 billion yuan, an increase of 87.06% over the same period last year; the operating profit was-69 million yuan, an increase of 71.39% over the same period last year; and the net profit belonging to the owner of the parent company was-63 million yuan, up 74.82% from the same period last year.
The rebound in electricity generation led to a pick-up in business income. On the one hand, with the economic recovery, the demand for electricity has gradually rebounded; on the other hand, due to the poor water situation in Hunan, hydropower generation has declined. The above two factors have led to a significant increase in thermal power demand in Hunan, with thermal power generation growing by 67.83% in September, much higher than the national level of 12.3%. Driven by this, the company's electricity generation gradually rebounded, leading to a gradual increase in operating income growth. In the third quarter, the company's operating income increased by 122.12 and 109.18 percentage points respectively compared with the first quarter and the second quarter, reversing the continuous negative growth of the company's operating income for five consecutive quarters. In the fourth quarter, taking into account the pick-up in demand and water conditions, we expect that the company's power generation will continue to improve, and revenue is expected to achieve good growth. At the same time, the rebound in power generation has also improved the profitability of the company's power business. In the third quarter, the company's gross profit margin was 6.1%, ending the situation of negative gross margins in the first and second quarters.
Coal price is still the main uncertain factor affecting the company's performance. In the first half of the year, the unit price of standard coal for power generation rose 10.55% compared with the same period last year, while in the third quarter, although it decreased from the same period last year, it still rose month-on-month. With the approach of the peak of coal consumption in winter, the market coal price is rising steadily, which will have an obvious impact on the profitability of the company. On the whole, coal price is still one of the main uncertain factors affecting the company's performance.
The capital injection commitment of the controlling shareholder has been partially completed. Due to the serious loss of thermal power assets of Datang Group in Hunan, the company first integrated Datang Group's small hydropower assets in Hunan. The company plans to issue 40.4 million additional shares to Datang Group at a price of 5.44 yuan per share to buy 35% of Zhangshui Company and 66.23% of Hengshui Company. If Datang Group makes a profit on its thermal power assets in Hunan, we think it is more likely that the group will continue to inject capital into the company.
Valuation and investment analysis. We estimate that the company's EPS in 2009 and 2010 will be-0.50 yuan and-0.50 yuan respectively, with poor profitability and loss. We maintain the company's "neutral" investment rating.
Risk hint. 1, the price of coal is rising; 2, the demand is falling.
