Benefit from the decline in coal prices and the increase in heating area: (1) Coal prices: in the first half of the year, the net profit of owners belonging to the parent company increased by 118.6% compared with the same period last year, and the main reason for the increase was the decline in coal prices. (2) Utilization hours: under the background of the decline in the growth rate of national power demand and the low utilization hours of thermal power, the advantages of cogeneration units are more obvious, and the utilization hours of cogeneration units in the company are higher than the average utilization hours of thermal power in Liaoning Province. (3) the increase in heating area: the increase in heating area mainly lies in Sujiatun thermal power and Dandong thermal power. The current heating area of Sujiatun thermal power is 4 million square meters, which is expected to reach 800-9 million square meters, and the current heating area of Dandong thermal power is 5 million square meters. it is expected to increase to 7 million square meters by the end of the year and 12 million square meters next year. If matching boilers, it will reach 16 million square meters in the future.
The reserve project is sufficient: the company reserves 2.62 million kilowatts of thermal power and 250000 kilowatts of wind power, totaling 2.87 million kilowatts, and the majority shareholder Huadian Group currently holds a 51% stake in Liaoning Tieling Power Generation (2.4 million kilowatts of installed capacity). In order to avoid inter-industry competition and other problems, there is the possibility of asset injection, and there is more room for growth. But in the short term, the company put into production units are mainly wind power, the contribution to the performance is relatively limited, mainly concerned about the development of thermal power.
Raise funds to reduce financial expenses: the company plans to issue no more than 1.2 billion yuan at a price of not less than 6.26 yuan per share. After raising funds, it is mainly used to repay loans, and it is expected to reduce financial expenses by more than 50 million yuan a year. Will significantly improve the company's profitability.
Investment advice: assuming that 150 million additional shares will be issued before the end of 2013, the company's EPS from 2013 to 2015 is expected to be 0.53,0.71 and 0.84 yuan respectively, corresponding to PE 12.8,9.5 and 8.1 times. Considering that the company is in Liaoning, the risk of electricity price reduction is relatively small, and the rating is upgraded to "overweight-A", with a 6-month target price of 7.50 yuan.
Risk hints: electricity price is reduced; coal price is lower than expected; utilization hour drops sharply; production of units under construction is delayed; heating area growth slows down, etc.