Incident: The company achieved operating income of 90.986 billion yuan in the first three quarters of 2024, up 0.40% year on year; net profit to mother of 4.429 billion, up 56.22% year on year; net income after deducting 4.38 billion yuan, up 100.04% year on year; basic EPS was 0.1,801 yuan/share, up 105.59% year on year.

Comment: Investment income increased year over year, and net income after deduction of non-return to mother increased year over year. The company achieved revenue of 32.676 billion in 24Q3, up 0.80% year on year and 18.51% month on month. The main reason was that average feed-in tariffs fell 2.8%/4.5%, respectively, and feed-in electricity volume increased 3.6%/27.5%, respectively. The 24Q3 gross profit margin was 13.24%, down 0.36 and 4.46pcts, respectively, resulting in a year-on-month decline of 1.83 and 11.3% to 4.328 billion, respectively. The cost rate during the 24Q3 period was 3.23%, up 0.05 pct year on year and 0.29 pct month on month, and remained stable. It is expected to benefit mainly from the profit growth of participating companies. The company's investment income in joint ventures and joint ventures increased 223.14% year on year to 0.609 billion, driving investment income up 35.22% year on year to 0.71 billion, accounting for 26.21% of the company's operating profit, up 6.89pcts year on year. 24Q3 The company's operating profit/total profit/net profit/net profit to mother increased by -0.32/0.92/-2.03/ 0.24%, respectively, and was basically stable. However, net net income after deducting non-return to mother increased 37.24% year-on-year. The main reason was that the company disposed of part of its shares in Huainan Luoneng Power Generation Company during the same period last year to obtain non-recurring income.

Operating cash flow reached a record high, and capital expenditure increased year over year. Net cash flow from the company's 24Q3 operating activities reached 10.959 billion, up 8.3% and 120.95%, respectively, from the same period last year, to record highs.

Capital expenditure was 7.364 billion, up 29.89% and -4.96%, respectively. Projects under construction at the end of the period stabilized at around 25 billion, and the installed capacity of new energy sources is expected to continue to increase. The balance ratio at the end of the period was 69.63%, remaining below 70%. After the return of perpetual bonds, it was 85.05%, which declined for the third consecutive quarter.

The amount of feed-in electricity increased month-on-month, and the year-on-year increase of new energy sources was significant. The company achieved 79.721 billion feed-in electricity in 24Q3, an increase of 3.58% and 27.48%, respectively. Among them, due to the year-on-year increase in electricity demand in the whole society and hot weather, coal engines increased by 1.54% and 30.16%, respectively, and combustion engines were 6.321 billion degrees, up 12.81% and 50.76%, respectively; due to seasonal water intake, hydropower increased by 12.423 billion degrees, respectively. 27.76%; Affected by the continued increase in installed capacity of new energy sources, wind power was 3.408 billion, up 23.10% and -19.65%, respectively, and PV 1.755 billion degrees, with year-on-month increases of 47.43% and 17.28%, respectively. Driven by installed capacity, new energy feed-in capacity is expected to continue to grow rapidly.

Profit forecast: In 2024-2026, the company's revenue is expected to be 122.8/123.3 billion, net profit to mother 4.156/5.153/5.965 billion, EPS 0.13/0.18/0.22 yuan, corresponding to PE 22.98/16.29/13.06 times PE, maintaining a “buy” rating.

Risk warning: Changes in the macroeconomic situation at home and abroad have exceeded expectations, fuel costs have fallen short of expectations, utilization hours and electricity prices have fallen short of expectations, and profit forecasts and valuation models have fallen short of expectations.