19 years of profit continued to recover, maintaining the "buy" rating
In 2019, the company achieved revenue / return net profit of 18.44 billion yuan, 54.8% compared with the same period last year, and profits continued to recover, but lower than expected (19-year net profit forecast: 1.62 billion). 20Q1 return net profit was-0.1% year-on-year, mainly due to higher coal prices + income tax rate-minority shareholders' equity increased.
Considering that the epidemic situation of COVID-19 has restrained the electricity demand in North China and other areas, we have lowered the company's profit forecast for 2020-21 to 1.67 billion yuan (previous value: 1.95 trillion), and it is expected to reach 1.87 billion in 2022, corresponding to 3.63 BPS 3.75 yuan 3.87 yuan. Maintain a "buy" rating.
The performance has achieved good growth in 2019, and electricity / electricity price is a bright spot.
According to the annual report, in 2019, the company realized revenue / return net profit / deduction of non-return net profit 184.4 per cent 13.6 / 1.31 billion yuan, compared with the same period last year, + 27.1% plus 54.8% plus 57.1 per cent. The rapid growth in performance is mainly due to the continued improvement in the main factors:
1) electricity: the power generation of the company-controlled power plant reaches 69.4 billion kilowatt-hours, which is + 23.2% compared with the same period last year, and the total utilization hour reaches 4893 hours. 2) electricity price: the average unit price is 269.04 yuan per kilowatt-hour (excluding tax), + 5.92% year-on-year. 3) Coal price: the standard coal price of the company during the year was 403.07 yuan / ton,-0.61% compared with the same period last year, benefiting from the improvement of the three factors. Of the 15 holding power generation operating enterprises of the company during the reporting period, 13 made profits. Among them, the performance of Xilin Power Generation / Daihai Power Generation / Ningdong Power Generation was + 2.6 billion yuan, 2.0 million yuan compared with the same period last year.
The slight decline in 20Q1 profits is mainly due to higher coal prices + income tax rate & the increase in the proportion of minority shareholders' equity. According to the first quarterly report, 20Q1 achieved revenue / return net profit / deduction of non-return net profit of 50.0exus 4.7 million yuan, compared with the same period last year. + 16.5% Universe 0.1% Universe 0.3%. Electricity prices continue to improve to drive high revenue growth, including electricity sales + 7.8% year-on-year, electricity sales price + 4.0% year-on-year, but restricted by 20Q1 coal price + 5.2% year-on-year, the improvement of the company's gross profit margin is not obvious. The first-quarter gross profit margin is + 2.4pct to 19.9% year-on-year, and the company's total profit is + 10.7%. In addition, the income tax rate-the increase in minority equity share further affects earnings performance: 1) income tax rate: 20Q1 company year-on-year + 2.0pct to 8.7%; 2) minority equity ratio: 20Q1 company year-on-year + 3.3pct to 17.7%.
Coal prices may move down, which need to be closely watched in the future.
20Q1 coal prices are rising, which we think may be related to the relatively tight coal supply in some parts of Inner Mongolia. According to the relevant data of the National Development and Reform Commission, the 1M20 Mengdong / Mengxi thermal coal price index is 11.0 yuan / ton respectively compared with the same period last year. According to the information disclosed by the Inner Mongolia Development and Reform Commission, since mid-late March, with the gradual increase in the resumption of work by enterprises and the gradual release of coal production capacity, coal prices in Mongolia have tended to fall in the near future. At present, the loose pattern of coal supply and demand across the country has been established, and coal prices are expected to decline gradually in the future. we estimate that in 2020, the center of Q5500 power terminal coal closing price will be about 530 yuan / ton, and the continuous downward movement of the coal price center will be conducive to the continuous recovery of the company's main business profits.
Downgrade earnings forecast and maintain "buy" rating
Taking into account the impact of COVID-19 's epidemic situation, we downgrade the company's profit forecast for 2020-21 to 1.67 trillion yuan (the previous value: 1.95 trillion), and it is expected to reach 1.87 billion in 2022, with a corresponding BPS of 3.63 to 3.75 and 3.87 yuan. With reference to the comparable company's 2020 average Pmax B 0.9x, considering the considerable elasticity of the company's coal price, we give the company a target of 0.9-1.0 x in 2020. Target price 3.27-3.63 yuan (previous value: 3.64-4.37 yuan), maintain the "buy" rating.
Risk hints: coal prices fall less than expected, utilization hours decline, electricity prices decline risk.