Incident: On October 29, the company released its report for the third quarter of 2024. In the first three quarters of 2024, it achieved operating income of 10.485 billion yuan, an increase of 1.22% year on year; realized net profit of 1.773 billion yuan, an increase of 8.38% year on year; realized deducted non-net profit of 1.744 billion yuan, an increase of 10.6% year on year. 2024Q3 achieved operating income of 3.82 billion yuan, down 4.13% year on year and 10.16% month on month; realized net profit of 0.585 billion yuan, down 16.60% year on year and 11.93% month on month; realized deduction of non-net profit of 0.577 billion yuan, down 10.83% year on year and 10.31% month on month.

Q3 Power generation declined slightly, and overall heating increased steadily. 2024Q3 generated 6.464 billion kilowatt-hours, down 3.51% year on year, and heating capacity was 2.5344 million tons, up 3.09% year on year. The cumulative power generation in the first three quarters was 17.623 billion kilowatt-hours, up 0.37% year on year, and the heating capacity was 7.3991 million tons, up 9.05% year on year.

24Q3 wind power generation was 1.017 billion kilowatt-hours, down 1.34% year on year. Offshore and onshore wind power declined slightly in the third quarter, but there was cumulative growth; PV power generation was 0.013 billion kilowatt-hours, up 11.02% year on year, with a cumulative total of 0.042 billion kilowatt-hours, up 19.27% year on year; thermal power generation was 0.434 billion kilowatt-hours, down 3.93% year on year.

The amount of coal and electricity has declined, gas and electricity profits have improved, and reserves for cogeneration projects are abundant. The 24Q3 coal-fired power generation capacity was 1.473 billion kilowatt-hours, down 20.19% year on year; gas and electricity generation reached 1.682 billion kilowatt-hours, up 9.66% year on year, and actively sought for the Jinjiang Gas and Power Phase II gas power generation project; cogeneration maintained steady growth. The Dongqiao (Quanhui) Thermal Power Phase I 2×0.66 million kilowatt cogeneration project approved in '23. The dynamic investment exceeded 6.9 billion yuan. The estimated annual power generation capacity after completion was 6.204 billion kilowatt-hours, with annual heating capacity of 6.204 billion kilowatt-hours 28.1355 million gigajoules; the Dongqiao (Quanhui) Thermal Power Phase II 2×0.65 million kilowatt cogeneration project approved in '24 has an estimated total investment of 5.59 billion yuan. The project will build 2 x 650 MW ultra-supercritical coal-fired power generation and heating units, and the project capital accounts for 30% of the total project investment.

Sea Breeze+ Savings is rich in active projects and continues to contribute to new installations. Wind power generation declined due to weak wind power generation in Q3. Among them, ocean wind power generation was due to the weakening of wind power in July-August, but the growth rate of wind power increased buffer power generation in September. In terms of the Haifeng project, the Changle Haihai District Offshore Wind Power Project was approved this year, with a total investment of 6.588 billion yuan. The planned installed capacity of the project is 0.656 million kilowatts, and the project capital accounts for 30% of the total project investment.

In terms of the pumped energy storage project, the Huashan pumped energy storage project invested by the company has an installed capacity of 1.4 million kilowatts (4 x 0.35 million kilowatts), and the cumulative construction period is 69 months; the Magnolia storage project has an installed capacity of 1.4 million kilowatts (4 x 0.35 million kilowatts), a pure pumped energy storage power station adjusted for the day, was approved and approved at the beginning of this year, and construction is to begin; it has obtained a pre-development work permit for the Dongtian Pumped Energy Storage Project, which has an installed capacity of 1.2 million kilowatts.

Investment advice: Coal power plant maintenance, compounded by weak ocean winds, has put pressure on short-term performance, but in the long run, the company has sufficient energy projects and high reliability of installed capacity. Our profit forecast for 24/25/26 is 28.72/31.92/32.59 yuan, EPS is 1.08/1.20/1.22 yuan, respectively, corresponding to the closing price of October 29 PE is 9/8/8 times, maintaining the “recommended” rating.

Risk warning: rising raw material costs; risk of electricity price fluctuations; insufficient electricity consumption.