In 2019, EPS is 0.20 yuan, an increase of 53.9% over the same period last year, and the dividend yield is 4.1%, which is attractive. Installed expansion drives electricity growth and electricity price rise, which is the main reason for performance growth. During the 1Q20 epidemic, coal prices in the producing area rose slightly, and the company is expected to have room for cost savings in the future. It is estimated that the company's EPS for 2020-22 will be 0.22 RMB 0.26 won, and the corresponding dynamic PE will be 2020 times that of 13-11-10, maintaining the "buy" rating and target price of 4.65 yuan.
In 2019, EPS is 0.20 yuan, 1Q20 EPS is 0.07 yuan. In 2019, the company's operating income was 18.44 billion yuan, an increase of 27.1% over the same period last year; the net profit returned to the mother was 1.36 billion yuan, an increase of 54.8% over the same period last year; EPS was 0.20 yuan, an increase of 53.9% over the same period last year, and the performance was slightly lower than expected. 1Q20, the company's operating income was 5 billion yuan, an increase of 16.5% over the same period last year; the net profit returned to its mother was 470 million yuan, down 0.1% from the same period last year; and EPS was 0.07 yuan, unchanged from the same period last year. The company plans to pay a dividend of 0.12 yuan per share, corresponding to the latest dividend yield of 4.1%.
The increase in installed capacity has pushed up electricity, and electricity prices have risen steadily. In 2019, the company generated 69.42 billion kilowatt-hours of electricity, an increase of 23.2% over the same period last year. 1Q20 generated electricity of 17.07 billion kilowatt-hours, an increase of 7.8% over the same period last year. The main reason for the increase in power generation is the operation of the first phase of units such as Xilin, Shiyan and Daihai. It is estimated that Jingxin, Yilin, Qinhuangdao and Yichun under construction are expected to be put into production in 2020, and Jingtai Phase II is expected to be put into production in 2021, which will continue to drive electricity growth.
Benefiting from the 3% reduction in the value-added tax rate from 2Q19 and the improvement in the market electricity transaction situation, the company's comprehensive grid electricity price in 2019 was 269.0 yuan / kWh, an increase of 5.9% over the same period last year. 1Q20 comprehensive grid electricity price 268.6 yuan / MWh, an increase of 4.0% over the same period last year. Benefiting from the rise in volume and price, the company's power generation revenue rose 27.8% year-on-year to 17.18 billion yuan in 2019, and gross profit margin increased 6.3% to 19.0%, which is the main reason for the performance growth.
Coal prices rose during the epidemic, and follow-up costs are expected to be saved. The unit price of standard coal in 2019/1Q20 of the company is 403.1 yuan / ton, a decrease of 0.6% / an increase of 5.2% over the same period last year, in which the price of 1Q20 coal rose or was affected by the short-term shortage of supply and demand in the area during the epidemic. With the rapid recovery of coal production capacity and the loose transformation of coal supply and demand, the cost side of the follow-up company may have room to save. Despite rising coal prices, the company's 1Q20 gross profit increased by 32.6% to 1 billion yuan compared with the same period last year, reflecting the positive rise in both electricity and electricity prices. 1Q20's performance was flat year-on-year, mainly due to an increase in financial charges, higher income tax rates, an increase in profit and loss for minority shareholders, and downward investment income.
Option incentives and buybacks have landed one after another, reflecting a positive signal. In January 2020, the company granted the first batch of 59.625 million stock options to 170 incentive targets, accounting for 1% of the issued shares, with an exercise price of 3.17 yuan per share. In March 2020, the company issued a repurchase plan and bought back 450000 shares for the first time in April at 2.78-2.79 yuan per share. The landing of the relevant scheme has a more positive instructive significance for the industry and the company.
Risk factors: electricity generation and feed-in electricity price are lower than expected, coal price is higher than expected, and unit operation is slower than expected.
Investment advice. Taking into account the impact of the epidemic and financial reports, reduce the power assumption, and correspondingly reduce the company's EPS forecast for 2020-21 by 55% to 0.22 yuan, and increase the EPS forecast for 2022 by 0.28 yuan. The dynamic PE for 2020-22 is twice as much as that of 13-11-10. Maintain the target price of 4.65 yuan and maintain the "buy" rating.