Events:
Company announcement mid-2020 report. In the first half of 2020, the operating income was 7.955 billion, an increase of 3.62% over the same period last year; the net profit belonging to shareholders of listed companies was 1.251 billion, an increase of 23.55% over the same period last year, in line with expectations.
Main points of investment:
The low base effect of water in 2019 highlights the high growth rate in the first half of this year, and water inflow is historically abundant in the third quarter. The cumulative power generation of the company's hydropower units in the first half of the year was 5.627 billion kilowatt hours, an increase of 34.05 percent over the same period last year. The high growth rate is mainly due to the low base effect in the first half of 2019 (the company generated 3.842 billion kilowatt hours in the first half of 2019 and 5.743 billion kilowatt hours in the first half of 2018, slightly higher than this year). On the other hand, the Qingjiang River Basin ushered in a historic abundance of water in July. The company's power generation reached 8.344 billion kilowatt-hours from January to July, an increase of 72.38 percent over the same period last year, which is much higher than the 4.847 billion kilowatt-hours in the same period in 2019. We estimate that the company's hydropower units in July are basically in a full state of 24 hours * 31 days. According to the rainfall forecast and hydrological data of the Yangtze River basin, we judge that the hydropower generation capacity of the company in August is also expected to be significantly higher than in previous years, and the results of the three quarters are worth looking forward to.
Jiangping River Hydropower has been put into production smoothly, and the installed scale of hydropower in the company has increased by about 10.8% compared with the same period last year. Jiangpinghe Hydropower Station is located in Enshi, Hubei Province, with a total installed capacity of 450000 kilowatts. It is the largest water conservancy project put into production in Hubei Province in recent years, with a total investment of 5.8 billion yuan, fully funded by the company.
There are two units in the power plant, which completed 72-hour full-load trial operation on July 28 and August 3 this year, respectively. After the commissioning of Jiangpinghe Hydropower Station, the installed scale of hydropower in the company reached about 4.6 million kilowatts, an increase of 10.8 percent over the same period last year, which is expected to add impetus to the high growth reported in the three quarters. In addition to hydropower, the company's new energy installation has reached 1.1594 million kilowatts, of which 65000 kilowatts were put into production in the first half of the year. At present, the total installed scale of various power types of the company has reached 10.4247 million kilowatts, and the proportion of clean energy installation has been further increased.
Thermal power generation rebounded month-on-month in the second quarter, and the impact of the flood season did not change the thermal power cycle as a whole. The company's thermal power generation capacity increased by 9.6% in the first half of the year compared with the same period last year, but considering that the company's two 1 million kilowatt units in Ezhou were put into production in May and June last year, the average utilization hours of the company's actual thermal power units decreased greatly. From a quarterly point of view, the company's thermal power generation fell 3.01% in the first quarter compared with the same period last year, and the positive growth rate in the first half meant a significant improvement in the second quarter compared with the same period last year. According to data from the China Power Union, the growth rate of electricity consumption in Hubei Province has rebounded rapidly since the second quarter, with monthly power consumption growth rates of-5.42%, 2.52% and 3.03% in April, May and June, respectively.
However, after entering July, due to the rapid increase in hydropower generation, we estimate that the company's thermal power generation fell 17.4% in July compared with the same period last year, which has been hit to a certain extent. From the cost side of thermal power, in addition to benefiting from the national coal price downward cycle, the company's Jingzhou coal and hot metal transport storage and distribution base is expected to be completed and put into production within this year, combined with Haoji Railway is expected to further reduce the company's coal price. Therefore, we believe that the short-term water impact does not change the thermal power cycle as a whole, and the company's thermal power profitability is expected to continue to repair.
Profit forecast and rating: the reported results are in line with expectations. We maintain the company's home net profit forecast of 25.06,27.79 and 3.142 billion yuan respectively from 2020 to 2021, with the current share price corresponding to 10, 9 and 8 times PE respectively, maintaining the "buy" rating.