Events:
The company released its annual report in 2016, and its performance was in line with Shenwan's expectations. In 2016, the company achieved operating income of 1.906 billion yuan, an increase of 15.15% over the same period last year. The net profit was 211 million yuan, an increase of 83.7% over the same period last year. EPS is 0.3928 yuan per share, and the weighted average return on equity is 18.95%, an increase of 6.82 percentage points over the same period last year. The weighted average return on equity after deduction is 6.45%.
Main points of investment:
The main business was sound, and non-main businesses such as the recognition of claims and the return of estimated liabilities led to a substantial increase in profits compared with the same period last year. The company completed electricity sales of 2.803 billion kWh in 2016, up 22% from the same period last year due to new power customers, 117.53 million m3 of gas sales, up 9.6% from the same period last year, and 27.62 million m3 of water sold, up 3.62% from the same period last year. The main business is operating steadily, with revenue growing by 15.15% compared with the same period last year. The company's parent net profit was 211 million yuan, compared with 116 million yuan in the same period last year. The sharp increase was mainly due to: the company sued Baohua Electric to confirm the creditor's rights of 76.205 million yuan; according to the bankruptcy ruling of Ledian Tianwei, the company turned back the estimated debt of 43.0648 million yuan; and the loss was significantly reduced year-on-year after the shutdown of Mojiang coal power plant completed personnel placement and asset disposal.
The electricity sales of new industrial customers increased, and the adjustment of peak and valley electricity prices affected the profitability of electricity sales. Benefiting from abundant water supply in 2016, the company's spontaneous electricity increased by 22% compared with the same period last year. The purchased electricity was 2.5 billion kW, an increase of 23% over the same period last year. In April 2016, the National Development and Reform Commission of Leshan and Luowei respectively issued a request to suspend the peak and valley electricity prices of thermal power on the grid side, the peak and dry electricity prices of thermal power on the grid side and the peak and valley electricity prices of hydropower from March and April. As a result, the company's electricity operating income decreased by about 27.6 million yuan, and the gross profit margin on electricity sales decreased by about 2.12 percentage points.
The company is the only regional power grid company in Leshan area and will continue to benefit from power reform in the future. At present, the electricity reform is advancing steadily, and various localities have made great efforts to promote the reform of the electricity sales side. In response to the power reform, the company has laid out the sales side business, promoted the construction of "Internet + smart grid", and explored the development of electricity service business. In addition, the Leshan Municipal Government and Sichuan Electric Power Company signed a strategic cooperation agreement to use the company as a platform for integrating Leshan regional power resources and promoting the upgrading of Leshan power grid. It is agreed that the company will gradually acquire the equity of power supply enterprises and some power transmission and transformation facilities held by the former two companies in Leshan.
Profit forecast and valuation: we maintain the company's profit forecast. It is estimated that the return net profit in 17-19 is 1.8,1.95 and 206 million yuan respectively, and the EPS is 0.33,0.36 and 0.38 yuan respectively. The current stock price corresponding to PE is 28 times, 26 times and 24 times respectively. As the only regional power grid company in Leshan area, the company is expected to continue to benefit from power system reform and state-owned enterprise reform and maintain its "buy" rating in the future.