3Q23's net profit is + 76% year-on-year, maintaining the profit forecast and target price Jingneng Electric Power released three-quarter report, 1-3Q23 achieved revenue of 23.6 billion yuan (+ 7% year-on-year), home net profit of 829 million yuan (+ 6.6%), deducting non-net profit of 811 million yuan (+ 8.9%). Of these, 3Q23 achieved revenue of 8.6 billion yuan (year-on-year + 7.8%, month-on-month + 34%) and return-to-home net profit of 460 million yuan (year-on-year + 76%, month-on-month + 1275%). The net profit growth mainly comes from the substantial increase in investment income compared with the previous year. To maintain the profit forecast, the estimated return net profit for 23-25 is 1.58 billion yuan for 1.09, 1.45 and 3.76 yuan for BPS, 3.69 and 3.74 respectively. With reference to the comparable 23-year average PB of 1.1x (Wind consensus expectations), the company was given a 23-year 1.1x target PB with a target price of 4.06 yuan, maintaining the "overweight" rating.
New units are put into production to boost coal electricity, electricity price fluctuations are affected by the spot market, the company's 3Q23 generation capacity is + 22% year-on-year to 26.5 billion kWh, and the demand in the power delivery area of the company's generator sets continues to pick up. Of these, thermal power generation was + 22% to 26.4 billion kilowatt hours compared with the same period last year, partly due to the increase in installed capacity, in which Jingning Phase II # 3Maple 4 units (each 660,000 kilowatts) were put into production at the end of 22 / April 23, and Jingtai Phase II (2x66 10,000 kilowatts) was put into production in August 23. The company's 1-3Q23 on-grid electricity price dropped 5.5% compared with the same period last year, of which 3Q23 dropped greatly compared with the same period last year; electricity price fluctuated with the market, and the spot market of electricity in the main distribution areas of the company's generator sets was rolled out in an all-round way. The company has sufficient coal power reserve installed capacity, including Zhuozhou thermal power 2 million kilowatt expansion project (land acquisition has been carried out, planned to be put into production in 2026) and Qinhuangdao thermal power phase II 2x66 million kilowatts (has been approved).
The new energy target is gradually falling to the ground, which is expected to contribute to the increment of power generation.
The company's 3Q23 new energy generation capacity is 80 million kilowatt-hours, the current electricity proportion is not high, but as the projects under construction are put into production, the scale of new energy power is expected to continue to grow substantially. Based on the location advantage, the company actively strives for the new energy development index of the power transmission channel, as well as the flexible transformation capacity new energy allocation index. In 2023, new energy projects are planned to put into production of 200000 kilowatts, all of which are photovoltaic projects, and 1.8 million kilowatt wind power projects have started construction one after another.
The performance is flexible enough to maintain the increased rating.
The fundamentals of the thermal power industry have bottomed out and rebounded, and the company's 3Q23 has substantially turned from deficit to profit. We expect the 23-25 year performance to be flexible enough. Comparable company's 23-year PB average 1.1x (Wind consensus expectations), the company's current share price corresponds to 23-year 0.8xPB. The company's thermal power assets are of high quality, giving the company 23 years of 1.1xPB, with a target price of 4.06yuan per share. Maintain the overweight rating.
Risk tips: the increase in coal prices is higher than expected, the number of hours of utilization is declining, and the progress of projects under construction is not as expected.