Event
Hubei Energy released Annual report 2019
According to Hubei Energy's annual report for 2019, the company achieved an annual operating income of 15.811 billion yuan, an increase of 28.67% over the same period last year, a net profit of 1.498 billion yuan, a decrease of 17.25%, and a net profit of 1.44 billion yuan, down 9.15% from the same period last year. The weighted average ROE was 5.6%, down 1.4% from the same period last year.
In the same period, the company released its quarterly report for 2020, with operating income of 3.698 billion yuan in the first quarter, an increase of 0.04% over the same period last year, and net profit of 453 million yuan, an increase of 13.07% over the same period last year.
Brief comment
The improvement of the profit of thermal power shows that the main business of the company is energy investment and management, and thermal power, hydropower, new energy and investment income are the four main profit contribution sectors of the company. In 2019, the water supply of hydropower in Hubei province is dry, and the demand for electricity is more exuberant. Affected by this, the superimposed Ezhou Phase III units were put into operation, and the company's thermal power business realized 17.936 billion kilowatt-hours of electricity generation for the whole year, an increase of 69.68% over the same period last year, and an operating income of 6.338 billion yuan, an increase of 60.33% over the same period last year. Affected by the dry water supply, the hydropower business completed 6.555 billion kilowatt-hours of electricity generation, a decrease of 20.23 percent over the same period last year, and realized operating income of 2.493 billion yuan, down 6.82 percent from the same period last year. The decline of hydropower revenue is mainly due to the relatively high comprehensive electricity price of Zagya hydropower in Peru, which is mainly due to the new consolidation table. From the perspective of business gross profit, the gross profit of hydropower, thermal power, natural gas, coal trade and wind power in 2019 was 1.178 billion, 1.09 billion, 116 million, 89 million and 422 million yuan respectively, with year-on-year changes of-332 million, 844 million, 34 million, 37 million and 118 million yuan.
Thermal power sector benefited from the increase in electricity and downward coal prices, profitability has been significantly improved, hedging the adverse impact of dry water from the hydropower sector, promoting the company's stable performance.
Management expenses and financial expenses have increased in the past 19 years. In the future, it is expected to improve the company's management expenses of 499 million yuan in 2019, an increase of 104 million yuan over the same period last year, and financial expenses of 663 million yuan, an increase of 268 million yuan over the same period last year. The increase in cost during the period is mainly due to the commissioning of Chagya Hydropower Station and Ezhou Phase III Power Plant. In the future, the company is expected to optimize management expenses through cost control, broaden financing channels, reduce capital utilization costs, and promote the continuous improvement of various expenses.
The installed capacity is mainly clean energy, and new energy projects under construction are expected to promote endogenous growth. In 2019, the company has put into production installed capacity of 9.87 million kilowatts, of which thermal power, hydropower, wind power and photovoltaic power generation capacity are 433,369,69 and 400000 kilowatts respectively, accounting for 44%, 37%, 7% and 4% respectively. Clean energy is the main installed capacity of the company. The company is currently under construction to wind power, hydropower, photovoltaic and so on, the future commissioning of new projects is expected to promote the company's endogenous growth.
The performance in the first quarter is good, the company is optimistic about the future development of the company, and the "buy" rating is maintained. Hubei was greatly affected by the epidemic in the first quarter of 2020, but the company benefited from the better water supply in the first quarter, the growth of its own installed capacity and the contribution of overseas units. It achieved a net profit of 453 million yuan, an increase of 13.07% over the same period last year. Taking into account the subsequent gradual recovery of electricity demand, the downward coal price increases the profitability of the thermal power sector of the company, we expect the company's 2020mur2022 net profit to be 2.021 billion yuan, 2.4 billion yuan and 2.484 billion yuan, corresponding to EPS of 0.31 yuan, 0.37 yuan and 0.40 yuan respectively, maintaining the "buy" rating.