Core views
In the first half of 2024, the company achieved operating income of 6.665 billion yuan, an increase of 4.57% year on year; net profit to mother was 1.188 billion yuan, an increase of 27.12% year on year. The increase in the company's net profit to mother was mainly due to the year-on-year increase in revenue from gas and electricity replacement electricity, the year-on-year loss reduction in Jinjiang Gas and Electricity, and the year-on-year increase in the profitability of thermal power. In terms of wind power, Funeng New Energy achieved net profit of 4.3.8 billion yuan, a year-on-year decrease of 10.47%; Funeng Strait achieved net profit of 0.233 billion yuan, an increase of 30.43% year-on-year, mainly due to the increase in feed-in electricity. 2024H1's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.18%, 2.09%, 0.97%, and 4.02%, respectively. The year-on-year changes were +0.03, -0.03, +0.09, and -0.77 percentage points, and financial costs improved year-on-year. In the first half of 2024, the company completed a total of 10.608 billion kilowatt-hours of feed-in electricity, an increase of 2.82% over the previous year. Since 2024, coal prices have shown an overall downward trend, and the company's thermal power profit situation is expected to continue to improve. At the same time, as the construction of the company's shareholding projects progresses, the company's operating performance is expected to maintain steady growth.
occurrences
Funeng Co., Ltd. releases 2024 semi-annual report
In the first half of 2024, the company achieved operating income of 6.665 billion yuan, an increase of 4.57% year on year; net profit of 1.188 billion yuan, up 27.12% year on year; net profit after deducting 11.6.7 billion yuan, up 25.50% year on year; achieved a weighted return on net assets of 5.40%, an increase of 0.83 percentage points year on year; and achieved basic earnings per share of 0.46 yuan/share, up 24.32% year on year.
Brief review
The scale of revenue increased steadily, and financial costs improved year-on-year
In the first half of 2024, the company achieved operating income of 6.665 billion yuan, an increase of 4.57% year on year; net profit to mother was 1.188 billion yuan, an increase of 27.12% year on year. The increase in the company's net profit to mother was mainly due to the year-on-year increase in revenue from gas and electricity replacement electricity and the year-on-year increase in the profitability of thermal power. By business, in terms of thermal power, the subsidiary Hongshan Thermal Power achieved net profit of 2.7.3 billion yuan, an increase of 14.04% over the previous year; the subsidiary Longan Thermal Power achieved net profit of 0.038 billion yuan, an increase of 3.22% over the previous year. In terms of coal and electricity, Funeng Guidec achieved net profit of 0.055 billion yuan, an increase of 134.15% year on year, mainly due to a year-on-year increase in other revenue. In terms of gas and electricity, Jinjiang's gas and electricity losses were -0.023 billion yuan, a year-on-year reduction of 85.38%. This was mainly due to the year-on-year increase in alternative electricity revenue in the current period, which began trading in the second half of the year in '23. In the first half of 2024, Funeng New Energy, a wholly-owned subsidiary of the company's wind power, achieved net profit of 0.438 billion yuan, a year-on-year decrease of 10.47%; Funeng Strait, a wind power holding subsidiary, achieved net profit of 0.233 billion yuan, an increase of 30.43% over the previous year. The year-on-year increase in Funeng Strait's net profit was mainly due to an increase in feed-in electricity, which led to an increase in revenue and profit. In terms of period expenses, 2024H1's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.18%, 2.09%, 0.97%, and 4.02%, respectively. The year-on-year changes were +0.03, -0.03, +0.09, and -0.77 percentage points, and financial costs improved year-on-year.
The Changle Offshore Project was recently approved. As of the end of June 2024, feed-in electricity capacity achieved year-on-year growth. The company controlled a total installed capacity of 6.0453 million kilowatts, including: 1.809 million kilowatts of wind power, 1.528 million kilowatts of natural gas power, 1.3411 million kilowatts of coal-fired pure condensation power generation, and 0.0472 million kilowatts of photovoltaic power generation. Recently, the Changle Offshore Zone J offshore wind farm project was approved. The construction entity is Funeng Haiyun Power Generation, a holding subsidiary of Funeng Co., Ltd., with a construction capacity of no more than 0.656 million kilowatts.
In addition, the company's projects under construction include the Fuding Thermal Power Plant expansion project, the Xianyou Mulan 1.4 million kW pumped storage project, and the Quanhui 1.32 million kW cogeneration project. Along with the further growth of the company's installed capacity, the company's operating performance is expected to further increase. In the first half of 2024, the company completed a cumulative power generation capacity of 11.159 billion kilowatt-hours, a year-on-year increase of 2.76%; a cumulative total of 10.608 billion kilowatt-hours of feed-in electricity, an increase of 2.82% over the previous year; and completed a total heating capacity of 4.8648 million tons, an increase of 12.43% over the previous year. Among them, the feed-in electricity for land wind, sea wind, coal-fired power, gas and photovoltaics were 14.93, 10.9, 31, 32.43, 16.53, and 29 million kilowatt-hours, respectively, with year-on-year changes of +4.4%, -4.71%, +4.26%, -3.37%, 18.88%, and 23.7%.
The decline in fuel prices helped improve thermal power profits. Maintaining the “buy” rating in the first half of 2024, the company achieved an investment income of 0.56 billion yuan, an increase of 7.79% over the same period last year. Currently, the company mainly invests in new energy development enterprises and nuclear power companies. Participating companies include Straits Power, Ningde Nuclear Power, Fujian Ningde No. 2 Nuclear Power Co., Ltd., Huaneng Xiapu Nuclear Power Co., Ltd., and CNNC Xiapu Nuclear Power Co., Ltd. Since 2024, coal prices have shown an overall downward trend, and the company's thermal power profit situation is expected to continue to improve. At the same time, as the construction of the company's shareholding projects progresses, the company's operating performance is expected to maintain steady growth. We estimate that the company's net profit from 2024 to 2026 will be 2.919 billion yuan, 3.098 billion yuan, and 3.296 billion yuan, respectively, corresponding EPS of 1.15 yuan/share, 1.22 yuan/share, and 1.30 yuan/share, maintaining a “buy” rating.
Risk analysis
Risk of poor wind power: The company's wind power project income and part of the investment income depend on the incoming wind situation in Fujian Province. In the first half of 2023, wind power intake was poor. If the wind power intake situation does not improve, the company's performance will face the risk of declining.
The risk of seafreeze competition lowering electricity prices: If competition in seabreeze competition intensifies and wind power feed-in prices continue to fall, the company's new wind turbine feed-in tariffs will drop, further lowering the company's overall feed-in tariff level and reducing the company's performance.
Investment income growth falls short of expectations: If the development of the company's participating companies is frustrated, the company's investment income may fall short of expectations, and the company's performance growth will also fall below the expected level.