Event: The company released its 2024 semi-annual report. In the first half of the year, revenue was 0.624 billion yuan, down 14.3% year on year; net profit to mother was 0.131 billion yuan, down 15.58% year on year; net profit after deduction was 0.116 billion yuan, up 9.62% year on year. In the second quarter, revenue was 0.327 billion yuan, down 13.21% year on year; net profit to mother was 0.085 billion yuan, up 6.84% year on year; net profit after deduction was 0.073 billion yuan, up 32.39% year on year. The company's performance for the first half of the year was basically in line with our previous expectations of 0.125 billion yuan.

The results for the first half of the year were dragged down by the trend. The deduction of negative growth in the second quarter was mainly affected by acquisitions. According to the announcement, the company achieved 1.5 billion kilowatt-hours of power generation in the first half of the year. According to the electricity price calculation, the average feed-in price for the first half of the year was 0.5400 yuan/kilowatt-hour, an increase from the full year of 2023 (0.5144 yuan/kilowatt-hour), or because the photovoltaic power plant put into operation last year participated in UHV delivery this year, the electricity price increased. We expect the decline in the company's performance to be mainly affected by wind conditions. The number of hours used for wind power in the Ningxia region in the first half of this year was 942 hours, down 104 hours from last year, down 10% year on year; of these, it fell 8% in the first quarter (down 39 hours year on year) and 12% in the second quarter (down 65 hours year on year). The company's net profit deducted for the second quarter of 2024 increased 32.39% year-on-year. This was mainly due to the acquisition of the 0.2 million kilowatt wind power project in Zuoqi, Inner Mongolia in the second quarter of last year, which confirmed the proceeds achieved during the acquisition in non-recurring profit and loss. In terms of installed capacity, as of the end of June 2024, the company controlled 1.9168 million kilowatts of electricity, including 1.6068 million kilowatts of wind power and 0.31 million kilowatts of photovoltaics. There were no new installations in the first half of this year.

Based in Ningxia, it gives new momentum from generation to generation, and is backed by a large aluminum source network with extensive load storage space. In the first half of this year, the company's 91.8 MW old fans in the Helanshan Wind Farm “big generation and small” renewal project were all connected to the grid to generate electricity, contributing more than 29 million yuan in profit. The company accounts for about 70% of the installed wind power from generation to generation. It is expected that the company's performance center will continue to move upward as old projects are upgraded. On the other hand, the company is the only green power listing platform under the China Alcoa Group, undertaking the China Alcoa Group's green and low-carbon strategic plan. Currently, the main projects under construction are distributed photovoltaics (integrated source network load storage model) within the Chinalco system. Currently under construction, 0.07 million kilowatt distributed photovoltaics are expected to continue to increase in the second half of this year, and the company's installed power supply may increase as China Alcoa Group's demand for green power increases under the dual-carbon strategy.

Profit forecast and valuation: Based on the company's business situation in the first half of the year and the electricity market situation, we maintained the company's net profit of 0.251, 0.312, and 0.388 billion yuan respectively for 2024-2026, corresponding to PE 16, 13, and 10 times, respectively, to maintain a “buy” rating.

Risk warning: Large and small projects fall short of expectations, new installations fall short of expectations, and fluctuations in electricity prices entering the market for new energy sources.