Event

Recently, the National Development and Reform Commission, SASAC and the Energy Administration jointly published the notice on removing the Ganeng Fengcheng Phase III expansion Project from the list of Coal Power shutdown projects in Jiangxi Province in 2019 (Development and Reform Energy [2019] No. 1868). The notice agreed to remove the Ganneng Fengcheng Phase III expansion 2 × 1 million kilowatt project from the list of coal power shutdown projects in Jiangxi Province in 2017.

Fengdian Phase III resumption of work has taken a key step! After the new project is put into production, the company's installed capacity will increase by 133%. The Fengcheng Phase III expansion project is a key project of electric power construction in Jiangxi Province, which is invested by the company to build 2 × 1 million kilowatt ultra-supercritical, secondary intermediate reheat, condensing coal-fired generating units. Affected by the "11 / 24" safety accident, the project was suspended on November 24, 2016.

The project was removed from the suspension list and a key step was taken to resume work. After completing the special evaluation and obtaining the legal documents, the company will start construction as soon as possible. According to the EPC supplementary contract signed between the company and the Central South Hospital, the construction period after the resumption of the project is 20-4 months.

The company is a power generation enterprise in Jiangxi Province, and its main business is firepower. At present, the installed capacity of Fengcheng Phase II thermal power plant is 2 × 700000 kilowatts, with another 100000 kilowatts of hydropower. After Fengdian Phase III is put into production, the company's installed capacity will increase by 133%.

The supply and demand of electric power in Jiangxi Province is tight, the demand for new power is strong, and the utilization hours of new projects are guaranteed.

In recent years, the secondary industry in Jiangxi Province has grown steadily, the electricity consumption of the tertiary industry and residents has increased rapidly, and the electricity consumption of the whole society in the province has increased year by year, with an average annual growth rate of 9.54% in the first three years of the 13th five-year Plan. In the same period, the growth rate of newly installed capacity in the province is slow, and the utilization hours of stock units are increasing year by year. Limited by resource conditions and other factors, the power supply in Jiangxi Province is mainly thermal power, and the unit utilization hours are high: 5269 hours in 2018, ranking first in the country; 4189 hours from January to October 2019, second only to Inner Mongolia (4443 hours). After the third phase of Fengdian is put into production, the urgent need of using electricity and coal in Jiangxi can be solved, and the company will make every effort to promote the resumption of the project, and it is expected that the utilization hours of the unit will be guaranteed.

It will raise more funds in 2015, have sufficient cash on hand, have a low asset-liability ratio and have room for financing.

According to the pre-construction plan of the project, the total dynamic investment of Fengdian Phase III project is about 7.67 billion yuan, of which the project capital is 1.53 billion yuan, accounting for about 20% of the dynamic investment. The net capital raised by the company in 2015 is about 2.15 billion yuan. At present, the funds are sufficient to meet the capital needs of subsequent construction. After the additional funds are raised in 2015, the company's asset-liability ratio remains below 40%. At present, there is a large room for financing, so a variety of financing methods can be used for future project construction. It is expected that the project will proceed smoothly.

Profit forecast: we estimate that the net profit of the company from 2019 to 2021 is 3.42,3.72 and 404 million yuan, and the EPS is 0.35,0.38,0.41 yuan per share. Maintain a "buy" rating.

Risk hint: coal prices are rising, electricity prices are down, electricity consumption is falling, and the resumption of the third phase of Fengdian is not as expected.