Event description
Leshan Electric Power released its results for the first three quarters of 2016 KuaiBao: during the reporting period, the company achieved operating income of 1.4 billion yuan, an increase of 17.39% over the same period last year, and a net profit of 246 million yuan, an increase of 333.82% over the same period last year.
Event comment
Benefiting from the strong demand for electricity in the region, the company has continued to achieve year-on-year growth in operating income. In 2015, other shareholders of Qianwei County Zhengxin Investment Co., Ltd., which was originally a shareholder of the company, completed capital reduction (Sichuan Province Qianwei Asset Management Co., Ltd., Qianwei County Zixin Construction Investment Co., Ltd. And Qianwei County State-owned assets Supervision and Administration Commission). The company became a wholly-owned subsidiary of the company and was completed in May this year. Chuanwei Electric Power Co., Ltd. is a county-level local power supply enterprise integrating "generation, supply, use, construction and management". It undertakes the power supply task of more than 600 industrial enterprises and more than 160000 urban and rural residents in Qianwei County. this table enables the company to expand the power supply area. Benefiting from the continued strong demand in the supply area, the company completed electricity sales of 2.065 billion kWh in the first three quarters of 2016, an increase of 21.29% (8.84% in the same caliber), and 751 million kWh in the third quarter, an increase of 11.21% over the same period last year. Electricity sales increased year-on-year, helping the company achieve operating income of 483 million yuan in the third quarter, an increase of 14.84% over the same period last year.
Non-recurring earnings were reconfirmed at the end of the contract dispute case, and the low performance in the same period last year led to a high increase in the third quarter of the year. In September this year, the implementation of the dispute over the electrical contract between the company and Baofan ended. According to the company's preliminary estimate, the company's annual profit will increase by 84.0957 million yuan, of which 66.8689 million yuan has been included in the first half of the year, and the remaining 17.2268 million yuan has been confirmed in the second half of the year. Re-confirmation of non-recurrent earnings led to the company's third-quarter results of 81.1531 million yuan. At the same time, due to the compensation for the closure of coal mines in the third quarter of 2015, the company incurred a non-recurrent loss of 20.8712 million yuan, resulting in a net profit of only 19.7022 million yuan in the third quarter of 2015. Due to the low base of performance in the same period last year, combined with the year-on-year increase in electricity sales in the third quarter and the reconfirmation of non-recurrent earnings, the company's third-quarter performance increased by 311.90% compared with the same period last year.
We will actively promote the integration of excellent assets and expand the scope of our main business, and join hands with Apple Inc to open up the development prospects of new energy business. In terms of main business, the company completed the consolidation of the company's political credit this year, and Hongya Huaxi Power Co., Ltd., a wholly-owned subsidiary, completed the acquisition of power assets in the southern mountain area of Hongya last year, realizing the expansion of its own hydropower stations, grid-connected hydropower stations and power supply areas, and the equity acquisition of Dadu River Power Company, which was entrusted to the company in 2012, is also accelerating. Dadian has five power stations with a total installed capacity of 108500 kilowatts and a network of 306100 kilowatts. The power supply network covers 19 townships in Ebian Yi Autonomous County. At that time, the company's main business is expected to expand again through Dadian. In addition, in April 2015, the company announced that Sichuan Shengtian New Energy plans to cooperate with Apple to operate Hongyuan Huanju and Ruoergai Huanju 40MW photovoltaic power station project, and the company indirectly holds a stake in 12.10% photovoltaic power station. According to the Central shares announcement, the two photovoltaic projects have all been connected to the grid, and the company is expected to achieve the sustainable development of new energy business in the future.
Investment advice and valuation: we maintain the company's profit forecast and expect the company to achieve EPS of 0.359 yuan, 0.246 yuan and 0.256 yuan in 2016-2018, corresponding to PE26.88 times, 36.34 times and 34.98 times, maintaining the company's "overweight" rating.
Risk hint: systemic risk, incoming water less than expected risk, project promotion less than expected risk
