Event: recently, Mindong Electric Power released its 2015 annual report. Over the past 15 years, the company achieved operating income of 910 million yuan, down 21.50% from the same period last year; net profit attributable to shareholders of the parent company was 23 million yuan, down 11.91% from the same period last year; and basic earnings per share was 0.06 yuan, down 14.29% from the same period last year.
Comments:
The pace of industrial transformation and upgrading accelerates the gradual transformation of power consumption structure to emerging industries. In 2015, under the influence of macroeconomic factors, especially the decline in industrial production, industrial restructuring, industrial transformation and upgrading, and temperature, the electricity consumption of the whole society increased by 0.5% compared with the same period last year, and the growth rate fell 3.3% compared with the same period last year. Electricity consumption in the secondary industry fell 1.4% year on year, the first negative growth in 40 years. The country is going through the stage of economic restructuring and transformation, the pace of industrial transformation and upgrading has been accelerated, the proportion of electricity consumption in the four high energy-consuming industries has been reduced by 1.2 percentage points compared with the same period last year, and the structure of electricity consumption has been continuously adjusted. It is changing from traditional high energy-consuming industries to emerging industries, service industries and domestic electricity consumption. In the past 15 years, due to the reduction of wind power generation, the wind power generation index has declined significantly, resulting in a 21.5% drop in revenue from the main business compared with the same period last year.
The profits of each section of the main business have decreased. The company is committed to the development of clean energy, new energy and other fields, power generation business is the company's core business. The company has made great efforts to develop renewable and clean energy industries such as hydropower and wind power. At present, there are 11 hydropower branches, two hydropower holding subsidiaries and two wind power holding subsidiaries. By the end of 2015, the company's equity installed capacity is 430325 kilowatts. Power sector: 15-year hydroelectric power generation and hydraulic power sales decreased by 11.21% and 11.22% respectively compared with the same period last year, mainly due to a decrease in rainfall in 15 years compared with the previous year, resulting in a decrease in hydropower generation and electricity sales compared with the same period last year; real estate sector: commercial housing sales revenue decreased by 21.73% year-on-year, net profit of 118 million yuan Trade sector: due to the suspension of the trading business of Huansan Industries, a subsidiary, the business volume decreased compared with the previous year, the trade income decreased by 99.44% compared with the same period last year, and the net profit was-38.48 million yuan.
New opportunities for hydropower and energy have been ushered in by the 13th five-year Plan. The national energy "13th five-year Plan" has formed the first draft, which is expected to be formally introduced in the first half of 16 years. The development pace of clean energy and energy conservation and emission reduction in China has been significantly accelerated. During the 13th five-year Plan period, the focus of China's hydropower development is the construction of large-scale hydropower bases, and the overall development degree of large hydropower bases reached 55% in 2015 and 70% in 2020. The company has basically completed the development of hydropower development resources in Fujian Province, and the government restricts no more new hydropower projects. the company will continue to pay attention to and track high-quality hydropower projects inside and outside the province and actively seek mergers and acquisitions. The 13th five-year Plan is also an important period for the large-scale development of new energy in China. As a national strategic emerging industry, the company will continue to actively and orderly promote wind power projects with better wind power resources in Ningde City.
In addition, the company will vigorously promote the Luxia wind farm project under construction, strive to fully put into production by the end of August 2016, and speed up the progress of the Xiapu floating Eagle Island wind power project. The company expects to start construction in August 2016 and put into full production by the end of 2017. As the project gradually reaches production, we expect to significantly increase the company's main hydropower industry income.
Profit forecast and rating: considering the new opportunities brought by the 13th five-year Plan to the company's main hydropower industry, and optimistic about the company's investment and prospects in basic and resource industries, we expect the company's EPS to be 0.08,0.09,0.12 yuan respectively in 16-18, maintaining the "overweight" rating.
Risk factors: a sharp drop in precipitation and a reduction in hydropower generation; a reduction in electricity prices; lower-than-expected real estate sales; and a lower-than-expected pace of mining consolidation.