Main points of investment
Event: Zhejiang Power released its three-quarter report in 2023, 2023Q1-Q3 achieved a total operating income of 69.506 billion yuan, year-on-year + 14.16%, return to the mother net profit 5.962 billion yuan, year-on-year + 1217.33%, deducted non-return mother net profit 5.662 billion yuan, year-on-year + 2461.36%. Single 2023Q3 Company realized operating income of 27.777 billion yuan, year-on-year + 11.28%, homed net profit of 3.184 billion yuan, year-on-year + 5459.89%, net operating cash flow of 3.905 billion yuan, month-on-month ratio + 50.25%. Combined with operating data, our comments are as follows:
Holding thermal power: the company's online electricity and electricity prices in the first three quarters were + 4.38% and + 0.46% respectively compared with the same period last year. The decline in fuel costs led to a high increase in profits. In the first three quarters of 2023, the company achieved a total of 1142.60 billion kilowatt-hours of online electricity, accumulative total year-on-year + 4.38%, kilowatt-hour revenue of 0.438 yuan, cumulative year-on-year + 0.46%.
On the other hand, the online electricity and kilowatt-hour income of 2023H1 are 709.35 billion yuan and 0.436 yuan per kilowatt-hour respectively, which are + 11.60% and + 0.97% respectively compared with the same period last year. The downward factor of the increase is that 2022Q2 has a low base of electricity generation, while 2022Q3 has greatly increased its power generation due to the problem of power shortage. In addition, the overall benefit from downward fuel prices, the company's 2023Q3 operating costs of 23.283 billion yuan,-6.7% year-on-year, driving gross profit margin + 8.21pct repair to 16.18%, single-quarter operating net cash flow + 50.25%.
Investment income: the investment income in the first three quarters exceeded 2022 for the whole year, and the investment income of 2023Q3 associated enterprises was + 77.82% compared with the same period last year. The shareholding companies of the company are mainly nuclear power and coal power joint venture companies, so the overall investment income has increased significantly. The joint investment income in the first three quarters is 10.20,11.55 and 1.371 billion yuan respectively, totaling 3.546 billion yuan, and 2.927 billion yuan for the whole year of 2022.
Investment advice: maintain the "overweight" rating. The company's statement side continues to repair, combined with its strong asset profitability, we continue to be optimistic about the improvement of the company's medium-and long-term value. Accordingly, we adjusted the company's homing net profit forecast for 2023-2025 to 74.90,89.25 and 10.294 billion yuan respectively, turning losses into profits, + 19.1% and + 15.3% respectively, corresponding to the closing price PE valuation of 8.1x, 6.8x and 5.9x on October 27, respectively.
Risk hints: large upward price of thermal coal, risk of electricity price fluctuation and macroeconomic risk