It was reported that the net profit of returning to the mother was 840 million yuan, an increase of 23.0% over the same period last year, in line with expectations. The increase of electricity driven by the intensive operation of new units, the increase in electricity prices and the slight drop in coal prices are the main reasons for the performance growth. From 2020 to 2022, the EPS forecast of the maintenance company is 0.22, 0.26, 0.28 yuan, the current price corresponding to the dynamic PE is 14-12-11, and the "buy" rating and target price are maintained at 4.65 yuan.

Reported EPS 0.12 yuan, the performance is in line with expectations. The company's 1H2020 revenue was 9.1 billion yuan, up 13.3% from the same period last year, and the return net profit was 840 million yuan, up 23.0% from the same period last year; corresponding to EPS 0.12 yuan, an increase of 20.0% over the same period last year, the performance was in line with expectations and fell in the lower half of the previous growth forecast. Quarterly revenue of the company's 2Q2020 was 4.1 billion yuan, an increase of 9.6% over the same period last year, and its net profit was 370 million yuan, up 49.4% over the same period last year. The corresponding EPS was 0.05 yuan, an increase of 25.0% over the same period last year.

The new units continue to be put into operation, promoting the growth of electricity. In the first half of the year, the company produced 33.15 billion kilowatt-hours of electricity, an increase of 7.3 percent over the same period last year; heat supply of 3301 million GJ, an increase of 29.3 percent over the same period last year; of which 2Q2020 generated electricity of 16.08 billion kilowatt hours, an increase of 6.7 percent over the same period last year. The increase in the company's power generation mainly comes from the contribution of Shiyan, which was put into operation in 2019, and Jingxin, Jingqin and other new units that were put into operation in 2020. At the end of June, the company has a holding installed capacity of 15.29 million kilowatts, an increase of 13.7% over the beginning of the period. It is expected that new units such as Linlin, Yichun and Qinhuangdao will begin to contribute electricity and heat gain in 2020, and Jingtai II is expected to be put into operation in 2021. In addition, the company also announced in July 2020 that it would start to build 1.32 million kilowatts of Jingning II, with outstanding continuous growth.

Electricity price upward coal price dropped slightly, gross profit margin improved year-on-year. Benefiting from the 3% year-on-year drop in the 1Q2020 value-added tax rate and the improvement in the market electricity transaction situation, the company's 1H2020 comprehensive grid electricity price was 268.0 yuan / MWh, an increase of 3.2% over the same period last year; market electricity accounted for 49.2%, up 1.8% from the same period last year. The unit price of the company's 1H2020 standard coal is 396.5 yuan / ton, down 1.1% from the same period last year. Compared with 1Q's 427.1 yuan / ton, the price of coal from Jing 2Q has dropped significantly. Affected by the above factors, the company's 1Q/2Q gross profit margin increased by 3.3 percentage points respectively compared with the same period last year, and the gross profit in the first half of the year increased by 500 million yuan over the same period last year, which is the main reason for the performance growth. In addition, due to the expense treatment of the operation of the new unit, the company's management expenses and financial expenses increased by 0.5 billion yuan respectively compared with the same period last year.

Option incentives and buybacks continue to move forward, sending out positive signals from management. 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, accumulating 0.46% of the total share capital by the end of July, with a repurchase price range of 2.77 to 3.06 yuan per share, which has a positive exemplary effect on the industry and the company.

Risk factors: power 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. The company's semi-annual report is in line with expectations and maintains a forecast of 0.22 EPS 0.26 EPS 0.28 yuan in 2020-2022, and the current price corresponding to dynamic PE is 14-12-11 times. Maintain the target price of 4.65 yuan and maintain the "buy" rating at 1. 3 times the target PB.