Core viewpoints

The company achieved a turnaround in 2022, mainly due to the commissioning of coal power projects in Turkey and the increase in the scale and efficiency of clean energy power generation. In 2022, the company's electricity generation increased by 6.7% compared with the same period last year, feed-in electricity price increased by 19.2%, and market transaction settlement electricity increased by 63% compared with the same period last year. In 2022, the company added 1.86 million kilowatt hours of installed capacity, including 1.32 million kilowatts of thermal power and 540,000 kilowatts of green power. 22Q4's performance declined in the third quarter compared with the third quarter, and we judge that it is mainly due to the increase in domestic thermal power fuel costs and the centralized calculation of year-end management expenses, and the superimposed photovoltaic power generation is not as expected.

Event

Shanghai Electric Power issues 2022 performance Forecast

Shanghai Electric Power issued a performance forecast for 2022, which is expected to turn losses into profits in 2022, realizing net profit of 301-353 million yuan, deducting non-return net profit of 126 million-147 million yuan. The main reasons for the company's turnaround are: 1) the rapid growth of the operating scale and profit contribution of overseas power generation projects, and the commissioning and profitability of coal power projects in Turkey; 2) the company has accelerated its green transformation and the scale and efficiency of clean energy power generation have increased.

Brief comment

Electricity has steadily increased throughout the year, and coal power in Turkey has maintained high-load power generation.

In terms of electricity, the company completed 63.7 billion kilowatt-hours of electricity in 2022, an increase of 6.7 percent over the same period last year, of which coal power / gas power / wind power / photovoltaic completed 428,69,90 and 5.1 billion kilowatt hours respectively, with year-on-year changes of + 3.4%, + 11.3%, + 9.7% and + 27.2%. The electricity growth was mainly driven by Turkish coal-fired units and new green power capacity. Online electricity reached 60.9 billion kilowatt hours, up 7.6 percent from the same period last year, and the average price was 0.62 yuan per kilowatt hour, up 19.2 percent from the same period last year. In terms of market trading, the settlement capacity of market transactions in 2022 was 41.8 billion kilowatt-hours, an increase of 63 percent over the same period last year, of which spot trading capacity was 94 million kilowatt-hours.

From a single 22Q4 point of view, domestic coal power / Turkish coal power / gas power / offshore wind power / onshore wind power / photovoltaic power respectively completed 89, 25, 17, 11, 12, 1.1 billion kWh, year-on-year changes of-7.1%, none, + 28.3%, + 40.8%,-11.9%, + 10.5%, month-on-month changes of-18.4%, + 99.2%,-32.5%, + 14.4%, + 18.2%,-31.1%. Specifically, 22Q4 domestic thermal power no longer bear the peak responsibility, electricity significantly declined; Turkey coal power benefit from doubling the installed capacity to increase electricity, the use of hours to maintain a high level; wind power to improve the wind ring ratio; photovoltaic light than the deterioration.

The Hunutru Power Plant has been put into operation ahead of schedule, and the installed scale of clean energy has been increasing.

In terms of installed capacity, the company added 1.86 million kilowatts of installed capacity in 2022, including 1.32 million kilowatts of installed capacity in Turkey's Hunutru Power Plant, 90,000 kilowatts of onshore wind power and 450000 kilowatts of photovoltaic power. By the end of December 2022, the company's holding installed capacity was 20.92 million kilowatts, with clean energy accounting for 52.91 percent of the installed capacity, of which coal power was 9.85 million kilowatts, accounting for 47.08 percent, gas power was 2.88 million kilowatts, accounting for 13.75 percent, wind power was 3.88 million kilowatts, accounting for 18.57 percent, and photovoltaic power generation was 4.31 million kilowatts, accounting for 20.60 percent.

Poor lighting superimposed by rising coal prices, Q4 performance is lower than expected

22Q4's quarterly net profit is expected to be 0.8 billion to 130 million yuan, which is lower than we had expected. According to the business sector, the overseas power plant plate is in line with expectations. In terms of electricity, Unit 2 of the Turkish Power Plant was put into operation on October 3, 2022, and the installed scale of the project doubled. The online power of the 22Q4 Turkish Power Plant was 2.53 billion kWh, an increase of 99.2% compared with the previous month. In terms of electricity prices, electricity prices in Turkey have accelerated since the third quarter of 2022. The average electricity prices in June, July, August, September, October, November and December (as of December 15) were 2.34, 2.33, 3.07, 3.85, 3.47, 3.44 and 3.57 lira / kWh, respectively, equivalent to 0.92, 0.9, 1.16, 1.47, 1.34, 1.32, 1.34 yuan / kWh in RMB terms. The average price of electricity in the fourth quarter was 1.33 yuan / kWh, up 13.28% from the same period last year (0.16 yuan / kWh). Domestic green power performance was lower than expected, 22Q4 offshore wind power, land wind power, photovoltaic grid power changes + 140 million kWh, + 186 million kWh,-484 million kWh, wind power improved as scheduled, but a sharp decline in photovoltaic power generation dragged down the performance of the green sector. Domestic thermal power performance is lower than expected, 22Q4 domestic fuel costs continue to rise, domestic thermal power or month-on-month losses increase, a drag on the overall performance.

Turkey's electricity prices remain high, and domestic thermal power is expected to be repaired in the first quarter, maintaining a "buy" rating.

As of January 10, 2022, the average electricity price in the Turkish market was 3470 lira per megawatt hour, up 1.6% from the 22Q4 average price, and the profitability of overseas power plants is expected to continue. According to Baichuan Yingfu data, in September, October, November and December 2022, the average spot prices of thermal coal in China are 1370 yuan / ton, 1537 yuan / ton, 1424 / ton and 1318 yuan / ton respectively, and the spot price has decreased significantly since November. Considering the coal cycle of coal power plants, we judge that the comprehensive fuel cost of 23Q1 Company is likely to decline, and the domestic thermal power plant is expected to usher in performance repair. We forecast that the net profit of the company from 2022 to 2024 will be 333 million yuan, 1.955 billion yuan and 2.366 billion yuan respectively, and the profits belonging to common shareholders will be 203 million yuan, 1.825 billion yuan and 2.236 billion yuan respectively, corresponding to 0.07 yuan per share, 0.65 yuan per share and 0.79 yuan per share.

Risk Tips:

Risk of rising coal prices: as the current coal performance rate of the Thermal Power Association does not reach the policy target of 100%, the fuel cost of thermal power is still affected by fluctuations in market coal prices. If coal prices rise sharply at this stage, it will lead to an increase in the cost of thermal power fuel.

Risk of decline in profitability of Turkish power plants: the profitability of Turkish power plants is affected by local electricity prices, fuel costs, power generation and other factors. If the international situation, geopolitical relations, international energy prices and the situation of electricity supply and demand in Turkey change, then there is a risk of profitability decline in Turkish power plants.

The risk that the installation progress of new energy is less than expected: the installation of new energy generation is affected by policy guidance, downstream demand, upstream material prices and other factors, the installation growth rate is uncertain, and the installation growth rate is lower than expected.

The risk of new energy power output fluctuation: the dispersion, instability and high cost of new energy restrict the development of new energy power generation projects. New energy power generation projects are faced with problems in resources, technology, economy, management, market and other aspects, and there are many differences and uncertainties in their investment construction and management mode.