occurrences
Shenzhen Energy released its 2018 annual report. Guimu's net profit fell 7.83% year on year. Shenzhen Energy & Power released its 2018 annual report. The company achieved revenue of 18.527 billion yuan for the full year of 2018, an increase of 19.18% over the previous year; net profit attributable to shareholders of listed companies was 691 million yuan, a decrease of 7.83% over the previous year. The return on net assets was 3.22%, down 0.17 percent year over year.
Brief review
The recovery of the power generation business contributed to high revenue growth and the steady development of clean energy installations
The company's main business includes electricity, gas, garbage disposal, etc. In recent years, electricity revenue has accounted for about 85%. In 2018, the electricity supply and demand situation in Guangdong Province was steady and positive. Combined with the impact of the operation of new units, the company achieved a feed-in capacity of 34.218 billion kilowatt-hours, an increase of 18.08% over the previous year. The company's power generation business has clearly picked up, helping to achieve high revenue growth. The company currently holds an installed capacity of 10.2961 million kilowatts, and the installed capacity of coal, gas, hydropower, wind power, photovoltaics, and waste incineration power generation is 4.914 million, 2.45 million, 822,500, 913,800, 97.08 million, and 225,000 kilowatts, respectively. The company's clean energy installations have reached 52.3%, and wind power and photovoltaic installations are located around East China and Inner Mongolia, maintaining steady development.
High coal prices push up operating costs, and multiple factors have led to volume increases and interest decreases
The performance of the company's power generation business was greatly affected by fluctuations in coal prices. Coal prices remained high in the market in 2018, and the company's fuel cost side was clearly under pressure. Our estimates show that in 2018, the company's thermal power, electricity, and fuel costs (including gas and electricity) reached 0.261 yuan/kilowatt-hour, an increase of 0.8 cents over the previous year. In addition to this, the resonance of multiple factors, such as the increase in the electricity volume of market-based transactions, the rise in financial expenses, and the decline in investment income of joint ventures, led to an increase in company volume and a decrease in profits over the same period last year.
Increase the deployment of clean energy, diversified endogenous growth is good, and maintain the “increase in holdings” rating
In 2018, the company put into operation two new waste incineration projects in Guilin, Guangxi and Chaoan, Chaozhou, with an additional treatment capacity of 2,700 tons/day. The company's current waste incineration power generation processing capacity is about 10,550 tons/day, and the processing capacity of projects under construction is about 14,130 tons/day. Waste incineration is expected to become a new growth point for the company's future performance. Furthermore, the company is speeding up the deployment of clean energy construction, and the wind power currently under construction has an installed capacity of nearly one million kilowatts. Considering that the scale of the company's wind power is expected to grow by leaps and bounds after the projects under construction are put into operation in the future, we believe that the wind power business will become an important support point for the company's electricity profits. Optimizing the power structure will promote the sustainable development of the company's power business and effectively reduce the impact of fluctuations in coal prices on the company's performance.
Considering that the company's installed structure is further optimized and endogenous dynamism is good under the diversified layout, we predict that the net profit of the company to the mother in 2019-2021 will be 1,114, 1,406 and 1,869 billion yuan respectively. The corresponding EPS will be 0.28 yuan, 0.35 yuan and 0.47 respectively, maintaining the increase in holdings rating.
