Incident: From January to September 2024, the company achieved operating income of 133.862 billion yuan, a year-on-year decrease of 2.79%; realized net profit attributable to mother of 9.191 billion yuan, an increase of 63.41%; and realized net profit deducted from non-mother of 4.655 billion yuan, a year-on-year decrease of 12.49%. Basic earnings per share were 0.515 yuan, up 63.49% year on year; weighted average ROE was 17.26%, up 5.46 pct year on year.

With 2024Q3, the company achieved operating income of 48.034 billion yuan (yoy -2.68%, qoq +19.3%); realized net profit to mother of 2.475 billion yuan (yoy -6.15%, qoq -49.8%).

Q3 Electricity consumption increased slightly from month to month, and average feed-in tariffs remained flat year over year. The company's feed-in electricity volume in the first three quarters was 329.695 billion kilowatt-hours (yoy +2.52%), and the feed-in electricity volume for thermal power/hydropower/wind power/photovoltaics was -1.11%, 15.46%, 5.75%, and 99.82% year-on-year. Good incoming water in the watershed and the increase in installed new energy sources led to an increase in feed-in power. Q3 The feed-in electricity volume in a single quarter was 126.726 billion kilowatt-hours (yoy +1.24%); the average feed-in tariff was 410.48 yuan/megawatt-hour. Thermal power/hydropower/wind power/photovoltaic feed-in electricity volume was -0.57%, 1.80%, 5.44%, and 78.62% year-on-year. The growth rate of thermal power and hydropower decreased significantly year-on-year; 23.36%, 37.90%, -13.79%, and 21.28%. Wind power generation declined significantly in a single quarter. The company's average feed-in electricity prices from Q3/1 to September were 410.48 and 428.17 yuan/megawatt-hour, down -0.09% and -2.31%, respectively. Considering that all new energy installations are affordable, the overall electricity price will be reduced, showing that thermal power prices remained high under the influence of market supply and demand.

Operating results are in line with expectations, and the impact of impairment is deducted from non-net profit. The reasons why the company's revenue fell 2.79% year on year in the first three quarters: first, electricity prices fell year on year; second, coal sector revenue decreased due to the transfer of China Power Construction Investment; net profit to mother increased 63.41% year on year; first, investment income from the transfer of Guodian Construction Investment Corporation increased; second, investment income from the company's associated enterprises increased; net profit without return to mother fell 12.49% year on year, mainly due to preparations for depreciation of the Daxingchuan Power Station's accrued assets.

Q3 New Energy added 1.54 GW of installed capacity, and the multi-power reserve project is sufficient. By the end of September 2024, the company controlled an installed capacity of 108.0633 million kilowatts, and coal/hydropower/wind power/photovoltaics accounted for 66.6%, 13.84%, 8.82%, and 10.74%. From January to September, the installed capacity of the company's new energy holdings increased by 3.3086 million kilowatts, and the Q3 quarter added 1.5383 million kilowatts. According to the company's interim report, the company's new energy resource reserve capacity is sufficient (6.6971 million kilowatts of approved or registered capacity), and there is still considerable room for growth in the new energy sector. In terms of conventional power supplies, the company is building four hydropower stations in the Dadu River basin, building or expanding coal-fired power generation and combustion engine projects, and investing in the construction of the Huoshan Pumped Storage Power Plant project in Anhui. The pace of development and construction of multiple power supplies is good and will continue to contribute to performance growth.

Investment advice: Coal prices continued to decline in the first three quarters. Combined with tight electricity supply and demand in some regions, coal and electricity prices remained at a high level. The gross profit space for thermal power generation was considerable, and the company's conventional power supply business developed steadily.

The installed capacity of new energy sources maintained a high growth rate and continued to increase performance. We expect the company's 2024-2026 revenue to be 188.064, 192.38, and 198.284 billion yuan, up 3.9%, 2.3%, and 3.1% year on year; achieving net profit to mother of 9.782, 9.104, 10.255 billion yuan, up 74.4%, -6.9%, and 12.7% year over year; corresponding EPS is 0.55, 0.51, 0.57 yuan, and corresponding PE is 9.2, 9.9, 8.7X.

Risk warning: Electricity demand falls short of expectations, risk of coal price fluctuations, risk of incoming water falling short of expectations, expected risk of falling electricity prices, risk of falling short of expectations in policy implementation, risk of falling short of expectations, risk of project construction progress falling short of expectations.