Description of the event
The company released its 2024 semi-annual report: in the first half of 2024, the company achieved revenue of 6.665 billion yuan, a year-on-year increase of 4.57%; net profit to mother was 1.188 billion yuan, an increase of 27.12% over the previous year.
Incident comments
The reduction in costs was compounded by the implementation of alternative electricity, and the profit of thermal power recovered significantly in the first half of the year. In the first half of the year, the company's cogeneration units generated 3.466 billion kilowatt-hours, a year-on-year decrease of 3.31%; coal-fired power generation completed 3.328 billion kilowatt-hours, an increase of 4.01% over the previous year, so the revenue side of the company's thermal power business remained relatively stable. However, thanks to the steady decline in coal prices, the company's thermal power business performance recovered significantly. In the first half of the year, Hongshan Thermal Power, a wholly-owned subsidiary of the company, achieved a net profit of 0.209 billion yuan (excluding investment income from Guoneng Shenfu), a year-on-year increase of 110.11%. The holding subsidiary Funeng Guidian also achieved net profit of 55.37 million yuan, an increase of 134.15% over the previous year. In addition to the significant recovery in the gas and power business, in the gas and electricity business, the company completed 1.689 billion kilowatt-hours of power generation in the first half of the year, an increase of 18.83% over the previous year. However, according to the company announcement, Jinjiang Gas and Electricity will transfer 2.15763 billion kilowatt-hours of electricity to other power generation companies in the province at a price of 0.3906 yuan/kilowatt-hour (tax included) from April to December 2024. Compared with the replacement electricity transfer only in September 2023, the company will begin to enjoy replacement electricity for the second quarter of this year Due to the increase in profits, the gas and power operator Jinjiang Gas Electric completed net profit of 22.54 million yuan in the first half of the year, a decrease of 0.132 billion yuan compared to last year. Since subsequent replacement electricity is still being traded, its losses are expected to continue to narrow. Overall, under the influence of the steady decline in coal costs and the implementation of alternative electricity usage policies, the company achieved a significant recovery in thermal power profits in the first half of the year.
Ocean Breeze performed well, and the return on investment remained steady. In the first half of the year, the company's wind power generation capacity was 2.646 billion kilowatt-hours, up 0.65% year on year. Among them, onshore wind power completed 1.115 billion kilowatt-hours, a year-on-year decrease of 4.66%; offshore wind power completed 1.531 billion kilowatt-hours, an increase of 4.9% year on year. Thanks to the excellent performance of Haifeng, Funeng Strait achieved net profit of 0.234 billion yuan in the first half of the year, an increase of 30.43% over the previous year; Funeng New Energy achieved net profit of 0.438 billion yuan in the first half of the year due mainly to onshore wind power, a decrease of 10.47% over the previous year. In terms of investment income, the company's investment income in the first half of the year was 0.56 billion yuan, up 7.79% year on year; China was affected by maintenance, its investment income fell 54.24% year on year to 64.1 million yuan, and the investment income calculated by the company's equity method was 0.489 billion yuan, a decrease of 4.30% year on year, but the company's other equity instruments received investment income of 70.3 million yuan during the holding period, up 878.33% year on year, mainly from China Resources Wenzhou's dividend income in the first half of the year. Overall, the company's thermal power and new energy businesses have achieved steady operating performance. As a result, the company achieved net profit of 1.188 billion yuan in the first half of the year, an increase of 27.12% over the previous year.
Shareholder return plans have been introduced, and the level of dividends is worth looking forward to. The company proposed in the “2024-2026 Shareholder Dividend Return Plan” that during the planning period, the board of directors of the company can propose that the company pay mid-term dividends based on the company's current profit, cash flow and capital requirements, so there will be room for further improvement in the company's dividends. Furthermore, in the context where Fujian Haifeng may be restarted and approved, the company's Haifeng growth is also expected to usher in a new round of catalysis, and the company's long-term growth can be expected.
Investment advice and valuation: According to the company's latest financial data, we adjusted the company's profit forecast. The company's EPS for 2024-2026 is 1.18 yuan, 1.27 yuan, and 1.40 yuan, respectively, and the corresponding PE is 8.42 times, 7.81 times, and 7.11 times, respectively, maintaining a “buy” rating.
Risk warning
1. The risk of non-seasonal increases in coal prices;
2. The construction progress of the new project falls short of the expected risk.