Investment points: the net profit belonging to the parent company increased by 60.81% in 2008 compared with the same period last year. The company is mainly engaged in thermal power business. In the first half of 2009, the company achieved operating income of 1.171 billion yuan, a slight increase of 5.59%. The net profit attributed to the parent company was-46.84 million yuan, an increase of 60.81% over the same period last year, corresponding to earnings per share. At the same time, the company expects a cumulative loss of-6700 mi-77 million yuan in the first three quarters of 2009, corresponding to earnings per share of-0.08 mi mi 0.09 yuan.

The increase in gross profit margin is the main reason for profit growth. The company's power business revenue and profits account for 70% of the total revenue and profits, so the improvement of power business in the first half of 2009 is the main reason for the company's profit improvement. When the company's electricity generation fell slightly by 7.96% in the first half of 2009 compared with the same period last year, due to the average electricity price rising by about 13% and the average standard coal price falling by about 10%, the gross profit margin of the power business reached 8.90% in the first half of 2009. It increased by 9.97 percentage points, which became the main reason for the improvement of the company's profits. Of course, in the second quarter of 2009, Huaneng Liaocheng thermal power replaced 75% of Shandong Liaocheng thermal power grid generation of 295 million kilowatt-hours (accounting for 13.92% of Liaocheng thermal power generation in 2008) also reduced the company's second-quarter loss.

The company's shell still relies heavily on the support of the actual controller. At present, the focus of the company is to preserve the shell, and judging by the current operating assets, if there is no further significant improvement in the business environment in the second half of the year, it will still be difficult to achieve normal profits in 2009. After Huaneng Shandong acquired a 56.53% stake in Luneng Taishan Cable Appliance Co., Ltd., the largest shareholder of the company, in December 2008, Huaneng Group took over Shandong Power Grid as the actual controller of the company. Huaneng Group is generally expected to ensure the company's profit in 2009 through asset injection or other means. In fact, Huaneng Shandong also took some measures after taking over the company, replacing Liaocheng thermal power grid to generate 295 million kilowatt-hours in April 2009, and in July 2009, the three 135000 kilowatt units shut down by the company's Laiwu Power Plant were taken as an indicator of Huaneng Shandong's "upper pressure and small pressure". These measures are undoubtedly to improve the company's operating conditions in 2009, but also show that major shareholders attach importance to the company's listing status, so it can be expected that if the company's cumulative losses increase in the rest of 2009, the actual controller may take more measures to ensure the company's listing status, and in any way, if the company succeeds in retaining its shell, it will stimulate the stock price to a certain extent.

We still maintain the company's 2009 EPS profit forecast of-0.10 yuan, the company's short-term investment value will mainly come from the actual controller Huaneng Group to take more effective measures to ensure the success of the company's shell in 2009, and we believe that this possibility is higher, so we continue to maintain the "cautious recommendation" investment rating.