维持“增持”评级：综合考虑雅砻江流域来水情况，下调 2024~2026年EPS 至1.03/1.17/1.23 元（原值1.16/1.21/1.27 元）。参考行业可比公司估值并考虑短期来水波动对公司股权价值影响有限，维持目标价22.04 元，维持“增持”评级。Introduction to this report:
The company's 3Q24 performance was in line with expectations; the phased increase in funding and installed capacity in Yalong River continued to grow over a long period of time.
Key points of investment:
Maintaining the “gain” rating: Taking into account the incoming water situation in the Yalong River Basin, EPS was lowered to 1.03/1.17/1.23 yuan (original value of 1.16/1.21/1.27 yuan) from 2024 to 2026. Refer to industry comparable company valuations and consider that short-term incoming water fluctuations have limited impact on the company's equity value. The target price is maintained at 22.04 yuan, and the “increase in holdings” rating is maintained.
3Q24 results were in line with expectations. The company's revenue from 1 to 3Q24 was 1.09 billion yuan, +6.5% year over year; net profit to mother was 4.42 billion yuan, +15.1% year over year. The company's 3Q24 revenue was 0.48 billion yuan, +2.1% year over year; net profit to mother was 2.12 billion yuan, +21.6% year over year, in line with previous performance reporting guidelines.
The participating holding business made concerted efforts, and Q3 results continued to grow. The company's 3Q24 investment net income was 2.09 billion yuan, +19.0% year-on-year. We estimate that it mainly benefited from the increase in investment income of the participating company Yalong River Hydropower according to the equity method. According to the Sichuan Hydrology and Water Resources Survey Center, the total amount of incoming water in the Yalong River Basin from July to August 2024 was 16.5 billion cubic meters, +78.3% over the same period last year. We estimate that 3Q24 combined total profit of 0.11 billion yuan, +0.05 billion yuan year on year. We speculate that the company's consolidated business mainly benefited from: 1) the improvement in incoming water in the watershed and the increase in installed capacity of photovoltaic power plants driven by the company. The 3Q24 holding power plant feed-in capacity was 2.3 billion kilowatt-hours, +2.9% year-on-year; 2) the company's 3Q24 gross profit margin was 62.7%, +3.1 ppts year on year; 3) The company's 3Q24 financial expenses were 0.13 billion yuan , -0.03 billion yuan year over year.
The company increased the capital of Yalong River Hydropower in stages to help Quanyi's installed capacity continue to grow over a long period of time. In October 2024, the company and SDIC Power plan to sign the “Agreement on Capital Increase to Yalong River Hydropower Development Co., Ltd.”. The agreement agreed to increase the total capital to Yalong River Hydropower by 15 billion yuan according to their respective shareholding ratios (of which the company increased the Yalong River Hydropower by 7.2 billion yuan), and to invest in installments according to the progress of Yalong River hydropower related projects. According to the company's “Notice on the 26th Board of Directors Resolution of the 9th Session”, in 2018, the company reviewed and passed the “Agreement on Capital Increase to Yalong River Basin Hydropower Development Co., Ltd.” It was agreed that SDIC Electric Power would increase Yalong River Hydropower by a total amount of not less than 13.5 billion yuan according to their respective shareholding ratios. We speculate that the capital increase agreement will have limited impact on the intensity of the company's investment expenses. The Yalong River Basin Clean Energy Base is planned to have a total installed capacity of 100 GW. By the end of 1H24, the Yalong River Basin had put in operation more than 20.8 GW of clean energy capacity. We believe that the Yalong River has broad scope for long-term growth, and that the capital increase will help Yalong River Company's installed capacity to grow sustainably over the long term.
Risk warning: Demand for electricity falls short of expectations, incoming water falls short of expectations, electricity prices are lower than expected, etc.
