Core ideas:

23Q3 performance has declined. The company disclosed that the revenue of 23Q1-Q3 was 2.736 billion yuan,-0.15% year-on-year, and the net profit of 23Q3 was 446 million yuan, 28.13% year-on-year. From a quarterly point of view, 23Q3 realized revenue of 1.019 billion yuan, + 5.78% year-on-year, and net profit of 188 million yuan,-13.13%.

The performance of 23Q3 is greatly affected by the increase of income tax expenses, the decline of investment income and other factors. 23Q1-Q3, gross profit margin is 23.10%, year-on-year-3.05pct, net profit rate is 16.32%, year-on-year-6.35pct, mainly due to the decline in gross profit of 23H1 power grid operation and the correction of income tax on distribution network energy saving. 23Q3, gross profit is 24.56%, year-on-year + 2.59pct, net profit is 18.43%, year-on-year-4.01pct, mainly due to the gradual expiration of the project tax exemption period, the reduction of deductions, income tax expenses increased to 44.86 million yuan (only 35.5 million yuan in the same period last year), and the production line of Chongqing Xinjiannan Building Materials Co., Ltd. stopped production and overhauled and the market price decreased, resulting in a decrease in net profit. The investment income calculated by the equity method dropped to 1.75 million yuan (compared with 3.33 million yuan in the same period last year).

Waiting for the energy-saving business of distribution network to reverse. According to the 22-year annual report, the 23-year capital expenditure plan amounts to 1.218 billion yuan, superimposed by 22 years of uncompleted capital expenditure, and the future distribution energy-saving business will be reversed soon.

The company will soon be light to deal with the problems left over from history, and integrated energy services and energy storage are expected to contribute to the growth highlights. The company has focused on the distribution network energy-saving project income tax and other issues, the follow-up will be light. It was announced in May that the Deputy General Manager of the Comprehensive Energy Division of the State Grid Comprehensive Energy Group and the General Manager of the Energy Storage Department of the State Grid Comprehensive Energy Group were appointed as the Deputy General Manager of the listed company, and the follow-up comprehensive energy services and energy storage business development should be paid more attention to.

Profit forecast and investment advice: it is estimated that the net return profit for 23-25 years is 620, 747, 932 million yuan, compared with the same period last year, + 1.1%, 20.6%, 24.7%. Give the company a 23-year 25.0x PE, corresponding to a fair value of 14.11 yuan per share, and maintain a "buy" rating.

Risk hint: the approved transmission and distribution price has declined; the growth of electricity consumption is not as expected; the development and production progress of distribution network energy-saving projects is not as expected.