Event: the company issued a forecast of results for the first three quarters of 2023 on October 13, 2023. It is expected to achieve a net profit of 52.47-6.678 billion yuan in the first three quarters of 2023, an increase of 1058.28-1374.17% over the same period last year, deducting a non-return net of 49.46-6.377 billion yuan, an increase of 2138.01-2785.52%.
Comments: earnings in the third quarter exceeded expectations, growing by about 80% month-on-month. Based on the company's performance forecast center, the company's net return profit / deduction of non-return net profit in the first three quarters was 5.963 billion yuan, an increase of 12 times over the same period last year, of which the third quarter net profit / deduction of net non-return net profit was 3.184 billion yuan, an increase of 53 times over the same period last year, an increase of 80.08% over the previous month and a significant increase in profitability, which is expected to be mainly due to the decline in coal prices. The benefit of the company participating in the holding of coal and power enterprises has been improved.
Five of 23H1's six important thermal power plants turned losses into profits, and one profit increased by 123%, with a total net profit increase of 1.421 billion yuan over the same period last year. Coal prices have fluctuated obviously since the beginning of this year. If the company increases procurement efforts when coal prices are low, the unit price of standard coal may fall more than expected.
Electricity generation has increased steadily and the return on investment has increased significantly. At the end of last year, the company managed units with a total installed capacity of 33.1128 million kilowatts, with coal and electricity accounting for 87.2 percent, of which 24.19 million kilowatts were located in Zhejiang Province, accounting for 55 percent of the province's integrated coal dispatching machine installed capacity. The proportion of Yueqing's third phase of the 21 million kilowatt project may be further increased in the middle of the year. Zhejiang GDP and the whole society steadily ranked fourth in the country in electricity consumption, which is expected to be mainly affected by the high base of electricity consumption caused by extreme weather last summer. Zhejiang's electricity consumption growth rate in the first eight months of this year was 4.63%, slightly lower than that of the whole country (5.00%). In the same period, the company's electricity generation increased by 5.51% compared with the same period last year, higher than the provincial and national level. In the first three quarters of this year, the company's electricity generation / online electricity increased by 4.27% and 4.38% compared with the same period last year, and the average online settlement price was 0.438 yuan per kilowatt hour (excluding tax), up 0.46% from the same period last year. The electricity price continued to rise month-on-month in the third quarter and rose nearly 20% compared with the benchmark price of coal in Zhejiang.
In addition to holding thermal power units, the company actively participates in nuclear power and thermal power. Except for 2021, the investment income has been stable at 22-3.3 billion yuan in the past 10 years, with 23H1 reaching 2.52 billion yuan, of which nuclear power and thermal power have contributed about 1.1 billion yuan and 900 million yuan respectively, an increase of more than 200 million yuan respectively over the same period last year, effectively supporting the company's performance.
With administrative intervention in the electricity market, the electricity price of the Changsha Association next year may exceed expectations. On October 13, the Ministry of Natural Resources and the National Energy Administration issued the "Special rectification work Plan for Market-oriented Trading of Mineral Resources and electricity", focusing on administrative intervention in the market-oriented trading of mineral resources and electricity. Focus on governance and intervention of electricity market trading organizations and electricity market price behavior, and is scheduled to be completed by the end of the year. Mainly benefit from the tight supply and demand of Zhejiang electric power, and considering the influence of coal price at the end of the year, the company's electricity price will remain at a high level next year.
Profit Forecast: from 2023 to 2025, the company's operating income is estimated to be 898.84pm 926.88pm, the net profit from its parent is 72.7883.43pm, EPS 0.54 PE is 0.62 0.67, and the corresponding PE is 6.97pm 6.44 times. Cover for the first time, giving a "buy" rating.
Risk hints: coal prices are lower than expected, electricity prices fall faster than expected, and investment returns are lower than expected.