Event: core Energy Technology releases three quarterly reports in 2023. In the third quarter, the company realized operating income of 212 million yuan, year-on-year-5.45%, net profit of 77 million yuan, year-on-year-4.87%, non-return net profit of 75 million yuan, year-on-year-6.34%. In the first three quarters, the company achieved operating income of 544 million yuan, + 4.83% year-on-year, and net profit of 186 million yuan, + 15.49% compared with the same period last year. Combined with the company's operating data, our comments are as follows:
Comments: weak lighting conditions-electricity prices under the high base are lower than the same period last year, and the third-quarter results are slightly under pressure. Affected by the rainy and typhoon weather at the location of the unit, the overall lighting conditions were weak in the third quarter, and the equivalent hours of Q3 of the company's photovoltaic power station decreased by 41 hours compared with the same period last year. In addition, during the summer at the peak last year, Zhejiang Province bought a large number of high-priced spot electricity between provinces due to power shortage. the profit and loss settlement of the whole electricity market from July to September was-49.9 yuan,-3.84 billion yuan and-440 million yuan respectively. Industrial and commercial users share profits and losses to drive up the customer-side electricity price. However, the phenomenon of power shortage this year has been alleviated compared with last year, and the profit and loss allocation of power transactions has decreased correspondingly. The reduction of large industrial electricity prices has led to a decline in spontaneous electricity prices, and the comprehensive electricity income of Q3 units has been reduced by 0.02 yuan per kilowatt-hour compared with the same period last year. Under the influence of the above two factors, the company's third-quarter results were under short-term pressure, with Q3 gross profit margin-0.96 pct compared with the same period last year; at the same time, due to reduced tax returns and lagging subsidies for power stations, the net operating cash flow in the first three quarters was-41.06% compared with the same period last year.
Prospect: the acceleration of the landing of self-supporting power stations will lead to the improvement of the profits of the main industry, and the energy storage and charging piles will advance steadily. By the end of 2023H1, the company's distributed photovoltaic power station under construction, to be built and the contract to be signed is about 169MW, with sufficient project reserves; and the company plans to issue convertible bonds to raise 880 million yuan, mainly for investment in the construction of 166MW power station, and the unit is expected to accelerate landing in the fourth quarter and next year. In terms of cost, since the beginning of this year, as the upstream capacity of the photovoltaic industry continues to release substantially, component prices have dropped significantly, while benefiting from the decline in LPR and commercial loan interest rates, the company has reduced stock and incremental loan interest rates through low-interest replacement, and the financial expense rate in the first three quarters is year-on-year-1.42pct. In addition, with the help of distributed customer resources, the company has steadily promoted the new business of energy storage and charging piles. According to the preliminary statistics, the total annual electricity consumption of the company's industrial and commercial customers is nearly 10 billion kWh. The electricity demand and resource space provide a broad application space for the follow-up industrial and commercial energy storage, charging piles, household storage products and other diversified business.
Investment advice: maintain the "overweight" rating. We adjusted the company's net profit from 2023 to 2025 to 2.32,2.84 and 342 million yuan, which was + 21.0%, + 22.7% and + 20.1% respectively compared with the same period last year. The PE valuation corresponding to the closing price on October 24 was 26.3x, 21.4x and 17.9x, respectively.
Risk hints: project expansion schedule is not as expected, roof lease stability risk, accounts receivable bad debt risk, electricity price drop risk, component cost upside risk, policy promotion is not as expected.