Event: Jingneng Electric Power released its third quarterly report in 2023. In the third quarter, the company realized operating income of 8.641 billion yuan, year-on-year + 7.79%, net profit of 460 million yuan, year-on-year + 75.68%, non-return net profit of 458 million yuan, + 87.30%. In the first three quarters, the company achieved operating income of 23.649 billion yuan, + 7.06% year-on-year, and net profit of 829 million yuan, + 6.63% compared with the same period last year. Combined with the company's operating data, our comments are as follows:
Comments: the main business profit repair & the improvement of investment income, performance as scheduled to reverse losses. 2023Q3 thermal power company completed 24.391 billion kilowatt-hours of electricity, + 21.56% year-on-year, new energy completed 84 million kilowatt-hours (the same period last year did not put into production of new energy), electricity increment is mainly contributed by Jingning II and Jingtai II new units.
Affected by the full development of the spot electricity market, the average electricity price of the company-controlled power generation enterprises in the first three quarters was 395.90 yuan / megawatt-hour,-5.51% compared with the same period last year, which was larger than that in the first half of the year. However, thanks to the downward cost of coal, the company's main profit repair degree is considerable, Q3 gross profit margin is more than Q2 + 4.79pct. In addition, the company's investment income in the third quarter reached 421 million yuan, compared with + 92.03% month-on-month and + 183.43% year-on-year, driving the company's net interest rate to 6.41%, month-on-month + 8.27pct, year-on-year + 2.23pctten Q3 financial expenses-13.30% compared with the same period last year.
Prospect: the new unit will be put into production to improve the power supply, and the performance will continue to be repaired. The Jingning Phase II # 4 unit (1 × 660MW) and Jingtai Phase 2 × 660MW unit newly put into operation this year are expected to continue to increase the online power consumption in the fourth quarter; at the same time, the Zhuozhou 2 × 1000MW expansion project and the Qinhuangdao second phase 2x660MW project were approved in February and July respectively, with the superimposed new energy accelerated development and the company's medium-term dimensional profit further thickened to be guaranteed. In addition, by the end of the third quarter, the company's inventory scale was + 30.75% compared with the same period last year, mainly due to the increase in coal-fired inventory. considering the low average coal price in the third quarter and the company is located in the coal-rich area of Shanxi and Inner Mongolia, there is still much room for improvement in coal power performance.
Investment advice: maintain the "overweight" rating. There is still a lot of room for profit repair in the main coal power industry. The commissioning of the units has led to an increase in electricity supply, and the promised dividend rate will not be less than 70 per cent in 2023-2025. We adjusted the company's net profit from 2023 to 2025 to 10.94,18.02 and 2.097 billion yuan, which was + 36.2%, + 64.7% and + 16.3% respectively compared with the same period last year. The PE valuation corresponding to the closing price on October 27 was 18.0x, 10.9x and 9.4x, respectively.
Risk hints: coal prices rising sharply, power trading risk, spot advance less than expected, macroeconomic fluctuations