Asset injection expectations: In 2010, additional exchange assets were targeted to major shareholders, and there were major changes in fundamentals. Currently, the assets are clean, simple and unburdensome. The parent company has a serious cash flow shortage problem. There are few projects under construction, the balance ratio is high, and it is difficult to change the status quo through its own development. The group's equity capacity is about 5 times that of the company, and has made promises. It is expected that future asset injections will be a probable event. We have simulated the asset injection plan. Although there may be differences from the actual situation, it is basically determined that asset injection will increase the company's performance.

Custody management fees are expected to exceed expectations: the company currently hosts group assets and uses a fixed fee+floating fee method to collect management fees. If the escrow agreement is renewed and the terms remain unchanged, it is expected that it will receive a portion of the variable expenses starting in 2013, and there is a possibility that it will exceed expectations.

Decline in utilization hours: 2012 was the peak period for thermal power unit production in Henan Province, and many thermal power units were put into operation from 2013 to 2014, but since the high-energy industry accounts for a large share of local electricity consumption, the growth rate of electricity consumption declined significantly. Also, considering the impact of Hami-Zhengzhou UHVDC power transmission, the utilization hours of thermal power in Henan Province will decline year over year. In 2011, due to special reasons, the number of hours used by companies was high, and it is expected that the number of hours used by companies will gradually decline and return to normal levels. The decline in hours used in the past two years is expected to be higher than the average in Henan Province.

The average price of coal is expected to continue to decline: benefiting from the decline in coal prices since 2012/6, the company's performance improved quarterly. The full year of 2012 turned a loss into a profit. Contract coal and market coal in Henan Province have been significantly reversed. The company is one of the biggest beneficiaries of the cancellation of the two-track electricity and coal system. The company is expected to reduce the average price of coal purchases by 1% and 12% year-on-year from 2012 to 2013.

Investment advice: The margin of safety is high. Excluding asset injection expectations and variable costs of custodian fees, the estimated EPS from 2012 to 2014 was 0.07 yuan, 0.40 yuan, and 0.35 yuan respectively, and the corresponding PE was 62.0 times, 11.3 times, and 12.8 times. From the perspective of enterprise value, it is currently equivalent to 3,931 yuan per kilowatt. If an asset injection occurs or the variable cost portion of the entrustment management fee is obtained, there is a possibility that it exceeds expectations. For the first time, a “buy-A” investment rating is given, and the target price is 6 yuan for 6 months.

Risk warning: lower electricity prices for the first phase of the power plant; a sharp drop in utilization hours; the decline in coal prices was lower than expected, etc.;