The performance of the annual report is basically in line with expectations, maintaining the "buy" rating
In 2019, the company achieved revenue / return net profit compared with the same period last year, which was basically in line with expectations (the previous forecast for 19-year return net profit was about 600 million), while 20Q1 achieved revenue / return net profit of-40.6% compared with the same period last year. 86.1%, a large decline over the same period last year, mainly due to the decline in power generation. Taking into account the risk of decline in power generation, we reduce the net profit of return to the mother of 51 million yuan in 21 years (the previous value: 790 million yuan), and it is expected to reach 650 million yuan in 22 years, corresponding to 4.23 BPS 4.66 pound 5.11 yuan, with reference to the comparable company's 20-year average of 0.9x. Considering the considerable elasticity of the company's coal price profit, we give the company a 20-year target PB of 1.1-1.2 x. Target price 4.65-5.08 yuan (previous value: 5.77-6.49 yuan), maintain the "buy" rating.
The performance of the annual report is basically in line with expectations, and the resonance of the three factors of thermal power has improved.
In 2019, the company realized revenue / return net profit / deduction of non-return net profit of 73.7 billion yuan, compared with the same period last year, which was + 12.2%, 174.6%, 195.9%, and the three factors of thermal power resonance improved during the year: 1) electricity: 189 billion kilowatt-hours of electricity generation / sales in 19 years, comprehensive utilization hours from + 488 hours to 5120 hours compared with the same period last year; 2) electricity price: benefiting from the reduction of value-added tax, the company's electricity price has gone up. 3) Coal price: the unit price of comprehensive standard coal in 2019 is-33.50 yuan / ton to 741.74 yuan / ton compared with the same period last year. According to the company's annual report, coal prices fell and increased profits by 201 million yuan compared with the same period last year, electricity generation rose by 197 million yuan, and the average price of electricity sold increased by 138 million yuan compared with the same period last year.
The obvious decline in 20Q1 performance is mainly due to the decline in electricity.
According to the company's quarterly report, 20Q1 realized revenue / return net profit / deducted non-return net profit of 12.03 billion yuan, compared with the same period last year, which was-40.6%, 86.1%, 86.2%, a big drop from the same period last year. During the 20Q1 period, the company generated / sold 3.039 billion kilowatt-hours of electricity, which was-40.7% and 41.0% respectively compared with the same period last year. The main reason is that due to the epidemic, electricity consumption in Hubei Province fell off a cliff, and in some periods, electricity consumption decreased by more than 35% compared with the same period last year. More than half of the thermal power units in the province were out of service, coupled with the good hydropower and water conditions of 20Q1, which further reduced the company's thermal power output space.
In addition, the company's related costs have increased in order to ensure power supply during the epidemic prevention and control period.
The Haoji Railway has been officially opened, and the downward price of coal in 2020 is expected to hedge against electricity to a certain extent. According to the Xinhua News Agency, the Haoji Railway has been opened before the National Day in 19 years. We believe that the Haoji Railway is expected to significantly increase the coal supply in Central China. And drive "Sanxi" coal transportation time in Hubei from more than a month to 1-3 days. According to Wind data, the average price of thermal coal in 4Q19 Hubei Province has dropped 63 yuan / ton to 581 yuan / ton, and 1M20 has further declined 62 yuan / ton to 578 yuan / ton. The company's coal power attribute is pure, and it is expected to fully benefit from the decline in coal prices in the future, thus hedging the electricity decline caused by COVID-19 's epidemic to some extent.
Downgrade earnings forecast and give a "buy" rating
Taking into account the risk of electricity decline during the year, we lowered the net return profit in 2021 to 51000,000 yuan in 21 years (the previous value: 790.84 million yuan). It is expected to reach 650 million yuan in 22 years, corresponding to 4.23 BPS 4.66pm 5.11 yuan. Referring to the company's 20-year average of 0.9x, considering the considerable elasticity of the company's coal price profit, we give the company a 20-year target PB of 1.1-1.2 x. Target price 4.65-5.08 yuan, maintain the "buy" rating.
Risk tips: upward coal prices, electricity price adjustment, water squeeze thermal power utilization hours.
