occurrences
Shenzhen Energy released its 2019 semi-annual report, with Guimu's net profit surging 92.21%. Shenzhen Energy and Electric Power released its 2019 semi-annual report. The company achieved operating income of 10.386 billion yuan in the first half of 2019, an increase of 30.14% over the previous year; achieved net profit attributable to shareholders of listed companies of 1,032 million yuan, a sharp increase of 92.21% over the previous year; net profit after deducting 915 million yuan from the previous year; the return on net assets was 4.2%, up 1.71 percentage points from the previous year.
Brief review
The main power industry is doing well and improving, and real estate revenue boosts performance
The company's main business includes electricity, gas, garbage disposal, etc. In recent years, electricity revenue has accounted for about 85%. Affected by a sharp increase in real estate revenue (including other businesses) in the first half of 2019, the share of the company's electricity business revenue fell to 67.4%. Affected by factors such as weak electricity demand and increased outbound power transmission in the Shenzhen region, the company achieved feed-in electricity volume of 16.235 billion kilowatt-hours in the first half of the year, a year-on-year decrease of 1.84%; electricity revenue was 6.996 billion yuan, a slight increase of 1.21% over the previous year. Benefiting from lower fuel costs combined with higher gross margin of new energy generation, the company's power business achieved gross profit of 1,668 billion yuan, an increase of 15.7% over the previous year. The main reason for the sharp increase in the company's performance in the first half of the year was that Electric Power Garden Phase II sales revenue was confirmed in the second quarter (confirmed in the second half of '18), driving the company's other businesses to achieve gross profit of 1,866 billion yuan, an increase of 1,799 billion yuan over the previous year.
The power installation structure continues to be optimized, and the development of clean energy is accelerating
As of the first half of 2019, the company's holding capacity reached 104.392 million kilowatts, and the installed capacity of coal, gas, hydropower, wind power, photovoltaics and waste incineration power generation was 4.934 million, 2.45 million, 8765 million, 913,800, 991,400 and 273,500 kilowatts, respectively. The company's clean energy installations have reached 52.7%. Wind power and photovoltaic installations are located around East China and Inner Mongolia, maintaining rapid development. The company's power installation structure continues to be optimized, and clean energy is developing at an accelerated pace. It is expected that the impact of fluctuations in coal prices on the company's main power business profit will be mitigated to a certain extent. The optimization of the power structure will promote the sustainable development of the company's power business.
Non-recurring profit and loss were the icing on the cake. The Nanshan Energy Community Project Change Path Company was affected by factors such as changes in the fair value of transactional financial assets in the first half of the year, confirming non-recurring profit and loss of 117 million yuan, adding to the company's performance. The company previously planned to invest in the construction of an urban renewal project for the Nanshan Energy Industrial Complex in Shenzhen on its own, but now it plans to change to a relocation cooperation model due to changes in the external environment. At present, the project has been transformed into a comprehensive community integrating residential, commercial and other functions. Vanke Development plans to obtain all the benefits of the project by paying 1.94 billion yuan in relocation compensation to the company. We believe that project changes will help the company focus on the development of its main business and enhance the company's performance.
Power plant shutdowns are under pressure to maintain the “increase holdings” rating
According to the requirements of the “Letter of the Guangdong Provincial Development and Reform Commission on Issuing the Work Plan to Promote the Decommissioning of the Shajiao Power Plant and the Construction of Alternative Power Sources”, Shajiao A Power Plant Units 2 and 3 and Shajiao B Power Plant Unit 1 will be shut down and decommissioned in 2019. Shajiao B Power Plant Unit 1 is the company's holding unit. Currently, the book value of its related assets is 457 million yuan. After the shutdown, it may put greater pressure on the company to depreciate its assets. Considering that the company's installed structure is further optimized and endogenous dynamism is good under diversified layout, the real estate business continues to improve to a certain extent to hedge against asset impairment pressure from power plant shutdowns. The company is expected to confirm the first phase of relocation compensation revenue in 2019. We forecast that the company's net profit to the mother in 2019-2021 will be 12.67 billion, 1,596 million yuan and 1,966 billion yuan respectively. The corresponding EPS will be 0.32 yuan, 0.40 yuan and 0.50 respectively, maintaining the increase in holdings rating
Risk warning
Risk of asset impairment; risk of decline in the number of hours of installed power generation utilization;
