Core views

2024H1 achieved operating income of 20.121 billion yuan, a year-on-year decrease of 0.85%, mainly due to the decline in electricity sales revenue of Turkish companies due to maintenance and fluctuations in electricity prices; net profit to mother was 1.327 billion yuan, an increase of 65.72% year on year, mainly due to an improvement in the profitability of coal power due to falling coal prices. The unit price (tax included) for the company's entry into the factory in the first half of 2024 was 1072.07 yuan/ton, down 12.13% year on year. Turkey's power plant achieved net profit of 0.304 billion yuan in the first half of the year, a year-on-year decrease of 35.73%. The company is actively promoting the implementation of clean energy projects. The 0.4 million kilowatt wind power project in Longnan and Wuwei in Gansu has already started, the comprehensive smart zero-carbon power plant project in Ibaraki, Japan has been connected to the grid and put into operation, and the Rixos Hotel PV project in Turkey has commenced. We expect the company's net profit attributable to common shareholders from 2024 to 2026 to be 2.207 billion yuan, 2.499 billion yuan, and 2.744 billion yuan, respectively, maintaining a “buy” rating.

occurrences

The company released its 2024 semi-annual report

2024H1 achieved operating income of 20.121 billion yuan, a year-on-year decrease of 0.85%; net profit of 1.327 billion yuan, a year-on-year increase of 65.72%; net profit after deducting non-attributable net profit of 1.316 billion yuan, an increase of 71.08%; achieved a weighted return on net assets of 6.33%, an increase of 2.16 percentage points over the previous year; and achieved basic earnings per share of 0.42 yuan/share, an increase of 64.14% year on year.

Brief review

The decline in coal prices drove domestic thermal power profit recovery. The decline in Turkish power plant profits of 2024H1 achieved operating income of 20.121 billion yuan, a year-on-year decrease of 0.85%, mainly due to Turkish companies' declining electricity sales revenue due to maintenance and fluctuations in electricity prices; net profit to mother was 1.327 billion yuan, an increase of 65.72% year on year, mainly due to an improvement in coal power profitability due to falling coal prices. The unit price (tax included) of the company entered the factory in the first half of 2024 was 1072.07 yuan/ton, down 12.13% year on year. Turkey's power plant achieved net profit of 0.304 billion yuan in the first half of the year, a year-on-year decrease of 35.73%, mainly due to power plant maintenance and falling electricity prices during this period. In terms of expenses, the company's sales rate, management rate, finance rate, and R&D rate were 0%, 4.23%, 8.89%, and 0.35%, respectively. The year-on-year changes were 0ppt, +0.17ppt, +0.22ppt, and +0.06ppt, and the cost control for the period was good.

Actively promote the implementation of clean energy projects and maintain the “purchase” rating. As of the end of June 2024, the company controlled an installed capacity of 22.69 million kilowatts. The installed capacity of coal power, gas power, wind power, and photovoltaic installations were 9.85 million kilowatts, 3.62 million kilowatts, 3.87 million kilowatts, and 5.36 million kilowatts, respectively. In the first half of 2024, the company achieved a cumulative power generation of 35.882 billion kilowatt-hours, an increase of 1.98% over the previous year; among them, coal power, gas power, wind power, and photovoltaics generated 23.9 billion kilowatt-hours, 4 billion kilowatt-hours, 5 billion kilowatt-hours, and 3 billion kilowatt-hours respectively. In addition, the company is actively promoting the implementation of clean energy projects. The 0.4 million kilowatt wind power project in Longnan and Wuwei in Gansu has already started, the comprehensive smart zero-carbon power plant project in Ibaraki, Japan has been connected to the grid and put into operation, and the Rixos Hotel photovoltaic project in Turkey has commenced.

We expect the company's revenue from 2024 to 2026 to be 41.289 billion yuan, 42.461 billion yuan, and 43.556 billion yuan, respectively. The corresponding net profit attributable to mother is 2.424 billion yuan, 2.738 billion yuan, and 3.006 billion yuan, respectively. The corresponding net profit attributable to common shareholders is 2.207 billion yuan, 2.499 billion yuan, and 2.744 billion yuan, respectively. EPS belonging to shareholders and shareholders was 0.78 yuan/share, 0.89 yuan/share, and 0.97 yuan/share, respectively, maintaining a “buy” rating.

Risk analysis

Thermal coal prices rebound and rise: If extreme weather causes hot weather to continue, demand for electricity and coal continues to rise, thermal coal market prices may rebound and rise, the company's thermal power business costs may increase dramatically, domestic thermal power business may continue to lose money, and the company's performance will also be affected accordingly.

Overseas business uncertainty: Some of the company's power plant business is located overseas and is greatly affected by changes in the international economic and political environment. If the international environment changes drastically, causing the company's overseas assets to be damaged or the quality of revenue shrinks, the company's performance may decrease accordingly.

Risk of exchange rate changes: If the Turkish economic environment changes drastically and the Turkish lira exchange rate falls against the RMB, the efficiency of the company's overseas power plants will decrease, and the company's performance may fall short of expectations.