This report is read as follows:
The squeeze at both ends of cost and price led to the company's 16-year performance slightly lower than market expectations, down 36.52% from the same period last year. The company will benefit from SPIC's asset integration in the Beijing-Tianjin-Hebei region in the future, injecting volume beyond market expectations and maintaining "overweight".
Main points of investment:
The decline in performance does not affect the expectations of transformation, maintaining the "overweight" rating. Although the company's performance in the main business in 2016 is lower than market expectations, we are optimistic about the company's transformation to the new energy sector, especially the performance increment that the new energy asset integration of SPIC Group will bring to the company is not fully recognized by the market. We adjust and forecast that the EPS of the company in 17-19 is 0.82 (- 0.25) / 1.14 (- 0.22) / 1.59 yuan respectively. Taking into account the huge potential of the company to benefit from SPIC's asset injection in the future, maintain the "overweight" rating and maintain the target price of 18.04.
The high price of coal and the decline of product prices have forced the transformation of new energy into accelerated performance. The company's operating income in 2016 was 2.38 billion yuan, down 7.01% from the same period last year, and its net profit was 283 million, down 36.52% from the same period last year. The main reason is that the rise of coal prices and the reduction of product-end electricity prices and steam prices have engulfed corporate profits, and the company has actively transformed its new energy business under the severe external situation. On the one hand, the company actively promotes self-construction projects in Shanxi, Inner Mongolia and other places; on the other hand, the company also signs cooperation agreements with Shanghai Aviation Industry, Shanxi Industrial equipment installation Co., Ltd., to open up the upper and lower reaches of the industrial chain and enhance the profitability of new energy business; in addition, the company is also actively promoting the asset integration of SPIC Group, which will contribute important increments to future performance.
The company will benefit greatly from the group asset integration in Beijing, Tianjin, Hebei and its surrounding areas: the market lacks awareness of the company's strategic position in SPIC, and the company, as SPIC's only listing platform in Beijing, Tianjin, Hebei and the Bohai Rim, will greatly benefit from the acceleration of mixed power reform. SPIC recently frequently listed assets as a key task in 2017, and the asset injection process of Hebei Company will be faster than the market expected. In addition, according to our incomplete statistics, the installed capacity of new energy assets in Beijing, Tianjin, Hebei and the Bohai Rim exceeds 2300MW, and the project reserve exceeds 5000MW. These potential resources may become the target of integration in the process of further asset securitization.
Core risk: SPIC assets integration progress did not meet expectations.