Main points of investment:
The company's operating performance is good, and profits increased significantly in the first three quarters of 16 years, thanks to the merger of Qianwei political investment, the shutdown of Mojiang Coal Power and the end of Baoshan Electric dispute. In the first three quarters of 16 years, the operating income reached 1.4 billion, up 17% from the same period last year; the net profit returned to the parent was 246 million, up 330% from the same period last year, of which the profit in the first three quarters increased by 72.89 million due to the end of the electrical contract dispute over Baogan; benefiting from the merger of Qianwei political Investment and the shutdown of Mojiang Coal Power, the net profit after deduction was 111 million in the first three quarters of 16 years, an increase of 59% over the same period last year.
The company is an integrated power company in Leshan area, and the main power industry is developing steadily. At present, the company consists of five power companies, which are mainly generated by hydropower, which is rich in water in the first half of the year. In the first three quarters of 16, electricity generation increased by 26% compared with the same period last year, compared with the same period last year, and the company's gross profit also improved slightly. Benefiting from the 16-year merger, electricity sales in the first three quarters of 16 years increased by 21% compared with the same period last year, a comparable increase of 9%. The company is a regional power grid enterprise, and its future development benefits from the general trend of power reform. The power engineering design subsidiary set up in July 2016 will mainly undertake power grid renovation projects.
To undertake Leshan water supply and gas supply is an integrated listing platform for public utilities under Leshan SASAC. The company includes a water subsidiary and a gas subsidiary. In the first three quarters of 16 years, gas sales increased by 10% over the same period last year, and water sales increased by 4% compared with the same period last year. Benefiting from the decline in natural gas prices and the rise in tap water prices, the company's tap water and natural gas gross profit margins have improved. In June 2016, the tap water subsidiary and Leshan Water Investment Co., Ltd. jointly set up Leshan Fifth Waterworks. With the development of urbanization and the reform and integration of state-owned enterprises in Leshan, the water and gas supply business is also developing steadily in the future.
There are regional integration expectations to expand the scope of the main business. The company has managed Sichuan Dadu River Power for a long time, and disclosed in the annual report that it will continue to increase the trusteeship work of Dadu River and strive to complete the acquisition as soon as possible. Dadu River Power, located in Ebian Yi Autonomous County, is an integrated power company in the county, with an annual power supply of about 1.8 billion kilowatt-hours in 15 years and a volume of 2.3 billion kilowatt-hours sold by listed companies in 15 years. Regional integration will further expand the scope of business.
Cooperate with Apple Inc New Energy to show the background strength of the company. The company and two shareholders Tianjin Central, Sichuan Development, Tianjin Jinlian Sichuan Shengtian and SunPower jointly established Sichuan Shengtian, with a shareholding ratio of 21.6%. At present, Sichuan Shengtian and Apple jointly operate Hongyuan Huanju and Ruoergai Huanju photovoltaic projects in Aba Prefecture, with a shareholding ratio of 56% and 44%, and the company indirectly holds a 12% stake. The company strides forward to the direction of new energy through photovoltaic projects, but also demonstrates the strong background strength of the company.
Profit forecast and investment advice. The estimated EPS of 16, 17 and 18 years is 0.49,0.25,0.27 yuan respectively. Considering that the higher non-recurrent income of the company in 16 years leads to the higher net profit in 16 years, the profit forecast of 17 years is more reasonable. Comparable listed companies have a 17-year forecast price-to-earnings ratio of 340.46 times, which is correspondingly valued at PE40, the median value of the 17-year forecast price-earnings ratio, with a target price of 10.00 yuan and an "overweight" rating.
Risk hint. Intra-regional integration is lower than expected.