Event: The company publishes its 2024 semi-annual report. During the reporting period, the company achieved operating income of 26.079 billion yuan, a year-on-year decrease of 7.98%; net profit to mother of 0.903 billion yuan, a year-on-year increase of 5.42%; and basic earnings per share of 0.17 yuan/share, an increase of 5.42% over the previous year. In the second quarter, revenue of 13.289 billion yuan was achieved, a year-on-year decrease of 13.11%; net profit to mother was 0.777 billion yuan, an increase of 1.11% year-on-year. The decline in revenue was mainly due to falling electricity prices, and overall performance was in line with expectations.

Fuel prices continue to fall, and profits from reducing costs and increasing efficiency from coal-fired power are still rising. The company's main business is mainly thermal power generation, and fuel costs account for 75.25% of operating costs. In the first half of 2024, fuel costs fell by 2.862 billion yuan year-on-year, or 14.46%. The average price of electricity sold in the consolidated report was 539.50 yuan/kilowatt-hour, a year-on-year decrease of 8.85%. Feed-in electricity in the coal and electricity sector was 38.817 billion kilowatt-hours, a year-on-year decrease of 7.90%, which is expected to be affected by the hydropower squeeze; the gas and electricity sector's feed-in electricity volume was 11.067 billion kilowatt-hours, an increase of 31.75% year on year. The decline in fuel costs effectively mitigated the adverse effects of falling electricity prices. The coal and electricity sector achieved net profit of 0.306 billion yuan during the reporting period, an increase of 48% over the previous year, and an increase in coal power profits. The gas and electricity sector achieved net profit of 0.144 billion yuan to mother, a year-on-year decrease of 43%. At the same time, the company fully grasped the current favorable conditions for falling fuel prices, carried out in-depth energy saving and consumption reduction efforts, and promoted energy saving and consumption reduction reforms such as comprehensive cold end efficiency improvement of coal power units and utilization of waste heat from flue gas. Ultimately, the company's coal consumption for electricity supply was reduced by 3.34 g/kwh over the same period last year, further reducing operating costs.

New clean energy and renewable energy machines were completed and put into operation, and the amount of feed-in electricity increased year-on-year. The company diversifies the power supply structure and develops clean energy and renewable energy projects. As of June 2024, the company has a total of 5.7785 million kilowatts of installed new energy such as wind power and photovoltaics. In the first half of 2024, the company added 0.8345 million kilowatts of new energy installed, including 0.6 million kilowatts of wind power and 23.45 kilowatts of photovoltaics. Benefiting from the completion and commissioning of new clean energy and renewable energy machines, the company achieved 53.904 billion kilowatt-hours of feed-in electricity during the reporting period, an increase of 0.84% over the previous year. Among them, feed-in electricity for wind power/photovoltaic/hydropower/biomass power generation was 25.92/1.045/0.11/0.273 billion kilowatt-hours, respectively, up 4.94%/1990%/15.79%/-8.08% year on year. The new energy business achieved net profit of 0.198 billion yuan to mother, a year-on-year decrease of 34.18%.

Investment advice: The company's 2024-2026 revenue is expected to be 57.415/63.205/69.183 billion yuan, up -3.8%/10.1%/9.5% year-on-year; net profit to mother is 1.357/1.89/2.24 billion yuan, respectively, corresponding to 2024-2026 EPS is 0.26/0.36/0.43 yuan/share, respectively, corresponding to 2024-2026 PE 16.6/11.9/10.1, respectively. The company still has resource advantages and profit repair elasticity, and maintain a “buy” rating.

Risk warning: power supply installation speed falls short of expectations; risk of electricity price reduction; price increase of upstream raw materials.