Incident: The company released its 2024 semi-annual report. 2024H1 achieved operating income of 2.215 billion yuan, a year-on-year increase of 8.23%; net profit to mother of 0.092 billion yuan, a year-on-year decrease of 34.28%; net profit after deducting 0.087 billion yuan, a year-on-year decrease of 55.85%; and basic earnings per share of 0.0882 yuan/share, a year-on-year decrease of 48.12%.

The amount of feed-in electricity and vehicle sales have risen sharply, putting pressure on performance due to investment income and electricity prices. 2024H1 completed feed-in electricity of 3.334 billion kilowatt-hours, up 12.38% year on year; sold 2.1066 million tons of steam, up 7.41% year on year. 24H1 achieved operating income of 2.215 billion yuan, an increase of 8.23% year on year, mainly due to the increase in total feed-in electricity volume due to the commissioning of the Eastern District gas and power project in the first half of 2024; net profit to mother was 0.092 billion yuan, a decrease of 34.28% year on year, mainly due to the year-on-year decline in investment income in the first half of '24 and the year-on-year decline in feed-in tariffs for coal-fired units and photovoltaic projects. The company is actively developing gas and electricity. The Baiyun 2×460MW natural gas power generation project began construction in June 2023, striving to put the first unit into production as soon as possible; the Knowledge City 2×460MW natural gas power generation project has already begun preliminary work, and construction is expected to begin in 2024. We believe that in the future, as new units are put into operation, it is expected to support the steady growth of the company's revenue.

Vigorously develop clean new energy, and develop photovoltaics, hydrogen energy, and energy storage together. 1) PV sector: The 500MW photovoltaic project in Jiangmen Taishan, a subsidiary of the company overcame the impact of adverse factors such as a decrease in the number of hours of power generation due to heavy rain and the reduction of feed-in tariffs in the first half of the year, making every effort to reduce the failure rate of system equipment, improve equipment reliability, and strive for more power generation; completed infrastructure construction for the Chaonan Longtian 400MW project and the Chaoyang Heping 150MW project in Shantou City; actively promoted the inclusion of the Huaiji 70MW project in the “10 Million Project”. Further promote the transformation and upgrading of enterprises to green, low-carbon and clean energy. 2) Hydrogen energy sector: The company took the lead in forming the Guangzhou Hydrogen Fuel Cell Innovation Consortium to promote large-scale verification of key domestic components and open up the “last mile” of transformation of science and innovation achievements. In June, the first batch of 40 hydrogen energy sanitation vehicles was delivered in batches between Guangzhou and Longyan. The vehicle hydrogen energy system was developed and produced by Hyundai Hydrogen Energy Technology (Guangzhou) Co., Ltd., a subsidiary of the company. 3) Energy storage: The company focuses on the Greater Bay Area and expands the Hunan and East China markets. While the energy storage company is steadily advancing the Sino-Singapore Knowledge City 50mW/100MWh independent energy storage project, the Shantou and Huaiji photovoltaic distribution and storage project, and the East District gas and electricity frequency modulation energy storage project, it is actively expanding industrial and commercial user-side energy storage projects, and successfully built a number of industrial and commercial user-side energy storage power plants such as Guanghe Technology and Dinghong Food.

Focus on efficiency and strengthen cost reduction and efficiency. 1) Guarantee supply and reduce coal procurement costs: Ensure fuel supply for coal-fired units by signing long-term coal supply cooperation agreements with large coal producers such as China's Shenhua, China Coal Energy, and Inner Mongolia Yitai Coal. 2) Guarantee supply and reduce natural gas procurement costs: Actively engage in natural gas procurement negotiations with industry leader CNOOC to ensure the company's stable supply of natural gas. 3) Optimize the financial structure and reduce financing costs: In the first half of '24, the company completed refinancing in the capital market and raised 1.35 billion yuan by issuing shares to specific targets, optimizing the financial structure; vigorously controlling liabilities and reducing costs through various methods and channels.

Investment advice and valuation: The company focuses on the main energy industry, conforms to the national energy development strategy, and responds positively to the call for “carbon peak, carbon neutrality”. We adjusted the company's profit forecast based on the company's actual operating conditions. We expect that in 2024-2026, the company's revenue will be 5.028 billion yuan, 6.281 billion yuan, and 7.053 billion yuan, respectively, with growth rates of 4.3%, 24.9%, and 12.3%, respectively, and net profit of 0.265 billion yuan, 0.349 billion yuan, and 0.42 billion yuan, respectively. The growth rates are -9.7%, 31.9%, and 20.3%, respectively. ratings.

Risk warning: Project progress falls short of expectations; approval progress falls short of expectations; risk of rising coal prices; risk of falling electricity prices; policy progress falls short of expectations.