Core views

In the first three quarters of 2024, the company achieved operating income of 10.485 billion yuan, an increase of 1.22% year on year; net profit to mother was 1.773 billion yuan, an increase of 8.38% year on year. In the third quarter of a single quarter, the company achieved net profit of 0.585 billion yuan, a year-on-year decrease of 16.60%. Considering the company's feed-in power and investment income, we believe that the year-on-year decline in net profit due to the year-on-year decline in feed-in power and investment income in the third quarter was mainly due to the year-on-year decline in feed-in power and investment income. Recently, the company's Quanhui Petrochemical Industrial Zone Cogeneration Phase II project was approved, and plans to build 2 new 650 MW ultra-supercritical coal-fired power generation and heating units. Currently, several of the company's power projects are being approved or under construction. With the further increase in the company's installed capacity, the company's operating performance is expected to further increase. Since 2024, coal prices have shown an overall downward trend, and the company's thermal power profitability is expected to continue to rise; in the long run, with the gradual completion and commissioning of the company's shareholding projects, there is still plenty of room for growth in the company's business performance.

occurrences

Funeng Co., Ltd. releases report for the third quarter of 2024

In the first three quarters of 2024, the company achieved operating income of 10.485 billion yuan, up 1.22% year on year; net profit of 1.773 billion yuan, up 8.38% year on year; net profit after deducting 1.773 billion yuan, up 10.60% year on year; achieved a weighted return on net assets of 7.89%, a decrease of 0.04 percentage points year on year; and achieved basic earnings per share of 0.70 yuan/share, up 7.69% year on year. In the third quarter of a single quarter, the company achieved net profit of 0.585 billion yuan, a year-on-year decrease of 16.60%.

Brief review

Financial expenses continued to improve, and net profit to mother fell year-on-year in the third quarter

In the first three quarters of 2024, the company achieved operating income of 10.485 billion yuan, an increase of 1.22% year on year; net profit to mother was 1.773 billion yuan, an increase of 8.38% year on year. In the third quarter of a single quarter, the company achieved net profit of 0.585 billion yuan, a year-on-year decrease of 16.60%. Considering the company's feed-in power and investment income, we believe that the year-on-year decline in net profit due to the year-on-year decline in feed-in power and investment income in the third quarter was mainly due to the year-on-year decline in feed-in power and investment income. In the third quarter of 2024, the company's feed-in electricity volume decreased by 3.35% year on year. Among them, wind power and thermal power decreased by 1.24% and 3.77%, respectively, and photovoltaic feed-in electricity increased 9.83% year on year. In the third quarter of a single quarter, the company achieved investment income of 0.285 billion yuan, a year-on-year decrease of about 0.1 billion yuan, a decrease of about 26.05%. In terms of the cost ratio for the period, the sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio of the 2024Q3 company were 0.21%, 2.03%, 1.03%, and 3.66%, respectively, with year-on-year changes of +0.05, -0.01, +0.22, and -0.71 percentage points. In the first three quarters of 2024, the company's financial expenses continued to drop. The total financial expenses were 0.384 billion yuan, a year-on-year decrease of 15.19%.

The Quanhui Thermal Power Phase II project was approved. Recently, feed-in electricity volume declined year-on-year in the third quarter. The company's Quanhui Petrochemical Industrial Zone Phase II cogeneration project was approved, and plans to build 2 650 MW ultra-supercritical coal-fired power generation and heating units. Currently, several of the company's power sources are approved or under construction, including the Magnolia 1.4 million kilowatt project, the Huashan 1.4 million kilowatt project, the Dongqiao Thermal Power Phase I 2×0.66 million kilowatt project, the Changle Offshore Wind Power 0.656 million kilowatt project, and the Dongqiao Thermal Power Phase II 2×0.66 million kilowatt project. Along with the further growth of the company's installed capacity, the company's operating performance is expected to further increase. In the first three quarters of 2024, the company completed a cumulative total of 17.623 billion kilowatt-hours of power generation, an increase of 0.37% over the previous year; completed a total of 16.758 billion kilowatt-hours of feed-in electricity, an increase of 0.47% over the previous year; and completed a cumulative total of 7.3991 million tons of heating, an increase of 9.05% over the previous year. Looking at the third quarter of a single quarter, the company completed 6.464 billion kilowatt-hours of electricity, a year-on-year decrease of 3.51%; completed feed-in electricity generation of 6.15 billion kilowatt-hours, a year-on-year decrease of 3.35%; and completed heating capacity of 2.5344 million tons, an increase of 3.09% over the previous year. Among them, the company's land wind, sea wind, coal-fired, thermoelectric, gas and photovoltaic feed-in electricity volumes were 4.08, 5.82, 13.65, 21.37, 16.46, and 212 million kilowatt-hours, respectively, with year-on-year changes of -1.19%, -1.27%, -20.41%, +0.16%, +9.65%, and +9.83%.

The decline in fuel prices helped improve thermal power profits. Maintaining the “buy” rating in the first three quarters of 2024, the company achieved an investment income of 0.844 billion yuan, down 6.62% from the same period last year. Currently, the company mainly invests in new energy development enterprises and nuclear power companies. Participating companies include Straits Power, Ningde Nuclear Power, Fujian Ningde No. 2 Nuclear Power Co., Ltd., Huaneng Xiapu Nuclear Power Co., Ltd., and CNNC Xiapu Nuclear Power Co., Ltd. As the fleet construction of participating companies continues to advance, the scale of the company's return on investment is expected to increase. Since 2024, coal prices have shown an overall downward trend, and the company's thermal power profit situation is expected to continue to improve; in the long run, with the completion of the company's shareholding project, there is still plenty of room for growth in the company's operating performance. We estimate that the company's net profit from 2024 to 2026 will be 2.775 billion yuan, 3.026 billion yuan, and 3.296 billion yuan, respectively, corresponding EPS of 1.09 yuan/share, 1.19 yuan/share, and 1.30 yuan/share, maintaining a “buy” rating.