Onshore wind power projects have been put into operation one after another, which is expected to consolidate business performance: by the end of June 2019, the company had already connected a total of 93,500 kilowatts of wind power projects to the grid, and achieved a net profit of 20.9 million yuan in the first half of 2019. Recently, the company announced that the company's Jiyangshan wind power project (50,000 kilowatts) has achieved all grid-connected power generation, with an estimated annual feed-in capacity of 110 million kilowatt-hours; the Zhonghua Mountain Phase II wind power project (49,500 kilowatts) has achieved the first unit connected to the grid, and is expected to achieve all grid-connected power generation in the first half of 2020, with an average annual feed-in capacity of 90 million kilowatt-hours. The company is actively developing profitable wind power projects, which is expected to further strengthen the company's operating performance. Suizhou Thermal Power started preliminary work to open up space for thermal power growth: According to the announcement, the company signed the “Suizhou Thermal Power Project Development Agreement” with the Suizhou Municipal People's Government of Hubei Province on December 30, 2019. According to the “Agreement”, the company plans to carry out the development and construction of a 2x660,000 kilowatt fuel power project in Suizhou, Hubei Province. The company promised to give priority to the Suizhou project among similar projects developed, and the two sides agreed to start construction before the end of 2020. The project was included in the list of new large-scale coal power projects in the “13th Five-Year Plan for Energy Development in Hubei Province” and is still in the early stages of preparation. Considering the tight balance between electricity supply and demand in Hubei Province, there are currently no large-scale power support points in Suizhou. The project is expected to be approved by the Hubei Provincial Development and Reform Commission in 2020 and put into operation around 2022. It is expected that the regional power grid structure will be improved to meet the growing demand for electricity consumption load. The number of hours used is worth looking forward to. The company currently has 3.59 million kilowatts of thermal power units. After the Suizhou project is put into operation, it is expected that the installed capacity of thermal power will increase by 37%, significantly increasing the profitability of thermal power. The electricity supply and demand pattern continues to improve, and coal prices have declined sharply year on year. The fourth quarter results are expected to exceed expectations: benefiting from supply-side reforms, the electricity supply and demand pattern in Hubei Province has improved markedly. The macroeconomic performance of Hubei Province is relatively good. The increase in electricity consumption in 2019 exceeded expectations. Coupled with the year-on-year decline in local hydropower output, the utilization rate of thermal power units increased. According to data from the China Telecommunication Union, from January to November 2019, the entire community in Hubei Province consumed 100 million kilowatt-hours of electricity in 2017, an increase of 7.4% over the previous year. Among them: secondary, tertiary and residential electricity consumption was 121.12 billion kilowatt-hours, 37.97 billion kilowatt-hours, and 40.47 billion kilowatt-hours, respectively, up 5.6%, 10.8%, and 9.6% year on year. In terms of coal prices, coal prices in Hubei Province have been declining steadily. The electricity and coal price index has been negative year-on-year for 11 consecutive months since the beginning of the year. From July to November 2019, the monthly electricity and coal price index in Hubei Province decreased by 8.0%, 7.9%, 6.3%, 7.3%, and 10.5%, respectively. As of the end of November, the province's regulated coal stocks for thermal power plants were 5.315 million tons. According to the average daily coal consumption of 124,000 tons/day for the same period last year, it can meet 43 days of consumption, and the inventory level is historically high. In addition to the fact that hydropower output is seriously insufficient recently, the year-on-year decline in electricity and coal prices in December is expected to expand further, and the fourth quarter thermal power performance is worth looking forward to. The Haoji Railway was put into operation as scheduled, and we are optimistic about the continuous improvement in the company's thermal power profit: as of the end of June 2019, the company held 3.755 million kilowatts of installed capacity, including 3.59 million kilowatts of thermal power, 93,500 kilowatts of wind power, and 21,600 kilowatts of biomass. The proportion of thermal power is as high as 97%, which is characterized by high coal price elasticity. Due to the scarcity of coal resources in Hubei Province, coal is mainly transported over long distances from other provinces, and fuel costs remain high. Considering the significant improvement in the country's coal supply and demand situation in 2019, the Haoji Railway was put into operation at the end of 2019, directly alleviating the double problem of “high procurement costs and high transportation costs” in central China. The company is located in the central China electricity load center, Changyuan Yifa is in Wuhan, the electricity load center, Jingmen Company is at the power support point in the middle of the Hubei power grid, and Hanchuan Yifa is an important power point in Jiangbei. The company is expected to make full use of the geographical advantages of the power plant and actively seek planned electricity. At the same time, by sorting through the construction progress of key power projects in Hubei Province, it can be seen that few large-scale power generation projects were put into operation in 2019-2020, and the electricity supply and demand pattern in Hubei Province is expected to improve dramatically. Against the backdrop of high growth in electricity consumption, stock thermal power units are expected to receive a significant increase in the number of hours used, and we are optimistic that the company's thermal power profits will continue to improve. Investment advice: Buy-A investment rating with a target price of 5.5 yuan for 6 months. We expect the company's revenue growth rates in 2019-2021 to be 10.0%, 0.4%, and 1.6% respectively, and net profit of 590 million yuan, 790 million yuan, and 790 million yuan respectively. The corresponding price-earnings ratios are 8.8 times, 7.3 times and 6.5 times, respectively. Risk warning: coal prices continue to be high, electricity prices are at risk of falling, and the progress of power projects falls short of expectations.