Zhejiang Neng Electric Power issued a forecast of results for the first three quarters of 2023, saying that in the first three quarters of 2023, the company expects to achieve a net profit of 52.47-6.678 billion yuan, an increase of 1058.28% RMB1374.17% over the same period last year; and deducting a non-homed net profit of 49.46-6.377 billion yuan, an increase of 2138.01% and 2785.52% over the same period last year.

Zhejiang Neng Electric Power issued a forecast for the first three quarters of 2023. After considering the correction of accounting errors in the previous period of Huaihe Coal and Power Plant, 2023Q3 expects to achieve a return net profit of 24.68-3.899 billion yuan, an increase of 4182.0-6664.4% over the same period last year, and a non-return net profit of 23.24-3.755 billion yuan, an increase of 13517.5-21777.7% over the same period last year. In the first three quarters of 2023, the company expects to achieve a return net profit of 52.47-6.678 billion yuan, an increase of 47.94-6.225 billion yuan over the same period last year, an increase of 1058.28 percent and 1374.17 percent over the same period last year. Deducting non-return net profit of 49.46-6.377 billion yuan, an increase of 47.25-6.156 billion yuan over the same period last year, an increase of 2138.01 percent and 2785.52 percent.

Thermal power is growing steadily, and photovoltaic power generation is high. As a province with a large economy and electricity consumption, Zhejiang province consumes 406.93 billion kilowatt-hours of electricity from January to August, a year-on-year increase of 4.6%. The company occupies a large share of Zhejiang power market. Driven by strong demand, the company completed 120.78 billion kilowatt-hours (+ 4.27%) of generating capacity and 114.26 billion kilowatt-hours (+ 4.38%) of online electricity in the first three quarters. From a power point of view, in the first three quarters, the company's thermal power generation capacity was 120.6 billion kWh, + 4.2% compared with the same period last year, maintaining a steady growth; photovoltaic power generation was 175 million kWh, + 50.9% compared with the same period last year. The substantial increase in photovoltaic power generation is mainly due to the rapid expansion of the photovoltaic field.

Downward coal prices + rising electricity prices highlight the flexibility of thermal power, and take great steps to transform the "double main business" in the table. Since the beginning of this year, the process of macroeconomic recovery in China has been relatively stable, while coal production capacity and imports have expanded significantly, resulting in high coal stocks, continuous downward coal prices, and a greater decline in imported coal prices, bringing sufficient flexibility to the profit repair of coastal power plants. At the same time, in the context of tight power supply and demand, the company's comprehensive grid electricity price in the first three quarters was 0.438 yuan / kWh, + 0.46% compared with the same period last year, further supporting performance growth. In addition, by holding Zhonglai shares, the company is expected to further develop the photovoltaic equipment manufacturing and distributed photovoltaic development market, and realize the transformation and upgrading of the dual main business of "thermal power plus new energy manufacturing".

Profit forecast and valuation. Zhejiang has obvious geographical advantages, traditional thermal power benefits from downward coal prices, profits continue to repair; participation in nuclear power, rich investment returns, become a performance "ballast stone"; relying on Zhonglai shares to break the restrictions on competition in the new energy industry, it is expected to cultivate new profit growth points in the photovoltaic field in the future. It is estimated that the company's homing net profit from 2023 to 2025 will be 75.1 billion yuan 8.64 billion yuan respectively, an increase of 511%, 15% and 6% respectively over the same period last year. The current share price corresponds to PE of 7.5x, 6.5x and 6.2x respectively, maintaining the "overweight" rating.

Risk tips: coal cost is higher than expected, long Association coal performance rate is lower than expected risk, grid price fluctuation risk, photovoltaic installation is not as expected, and so on.