Event: when the company released its semi-annual report on August 24, 2023, 23H1 achieved operating income of 8.939 billion yuan, an increase of 1.06% over the same period last year; net profit of 84 million yuan, an increase of 242.65% over the same period last year; net deduction of-27 million yuan, an increase of 78.14% over the same period last year; gross profit margin increased by 1.52pcts to 9.46% compared with the same period last year, of which Q2 increased 9.19/8.13pcts to 14.33% EPS 0.05 yuan per share.

Comments: double rise in electricity price and decrease in Q2 cost. The company's performance forecast shows that the net profit of returning to the mother is about 80 million yuan (reversing losses compared with the same period last year), and the net deduction of non-return to the mother is about-25 million yuan. The company's reported performance is basically in line with the performance forecast, but also in line with our previous expectations. On the revenue side, the company's 23H1 achieved a double increase in electricity price, with a year-on-year increase of 2.37%, 2.02%, 49 to 2138 hours, and an average online price of 399.39 yuan per megawatt-hour, an increase of 1.44 percent (5.66 yuan / megawatt-hour). On the cost side, the average comprehensive standard coal price of the company's 23H1 is 977.54 yuan / ton, an increase of 1.44% (13.89 yuan / ton) over the same period last year. It is estimated that Q2 has been less than 900 yuan / ton. It is expected that with the overall downward movement of the coal price center, the company's fuel cost is expected to continue to reduce. Considering the impact of the coal inventory cycle, the superimposed electricity price is expected to remain high, and the company's profitability may increase quarter by quarter.

The reserve projects under construction are sufficient, and the scale is expected to continue to grow. As of the end of 23H1, the company's control / rights and interests operation installed capacity of 915 kilowatts and 9.62 million kilowatts, 51% Shouyang Thermal Power 700,000 kilowatt Unit 1 has passed 168-hour trial operation on July 19, and Unit 2 and 50% Yangquan Thermal Power Unit 1.32 million kilowatt units are expected to be put into production in 23H2. In addition, the company controls 660,000 kilowatts of Xibaipo Power Plant Phase IV, 700000 kilowatts of Renqiu Thermal Power Phase II, 1.32 million kilowatts of Guoneng Cangdong Phase III and 1.32 million kilowatts of Guoneng Hengfeng Phase II have been approved, and the installed scale of the company's rights and interests is expected to continue to grow. drive the continuous improvement of revenue and profit.

The investment in R & D has increased significantly, and the competitiveness of the unit may be improved. During the 23H1 period, the company's expense rate increased by 2.43pcts to 11.42% compared with the same period last year, mainly due to the company's increased investment in R & D, with a total completion of 425 million yuan (+ 421.34%), R & D expenses increased by 518.2% to 414 million yuan over the same period last year, the R & D expense rate increased by 3.87pcts to 4.63% year-on-year, and there were 168 science and technology projects under research. A substantial increase in the company's R & D investment may help to improve the company's thermal power unit peak and frequency regulation and other auxiliary service capacity, reduce power supply coal consumption rate and comprehensive fuel unit price, improve unit operation stability and heating capacity, etc. with the rapid increase of new energy installation and share in the whole country, especially in Hebei Province, thermal power units are expected to play a more important role as the "ballast stone" of power system. And with the auxiliary service market, spot market, inter-provincial market, carbon trading market, capacity market gradually established and improved to obtain additional income.

Profit Forecast: the company's operating income from 2023 to 2025 is estimated to be 18.407 plus 18.721 billion yuan, net profit of 2.46 million yuan, 7.11 billion yuan, 0.54 million yuan for EPS, 0.40 pound, 0.52 yuan, and 11.91 times for PE respectively, maintaining the "overweight" rating.

Risk hint: the decline in coal prices is not as expected, and the transaction price is not as expected.