Description of the event

The company released its three-quarter report for 2024: in the third quarter of 2024, the company achieved operating income of 7.467 billion yuan, a year-on-year decrease of 9.87%; net profit to mother was 1.648 billion yuan, an increase of 41.58% over the previous year.

Incident comments

The transfer of thermal power completed the relief of wind power pressure, and revenue performance was limited by coal trade. In the first three quarters, the company added 2.6575 million kilowatts of new energy, including 0.6263 million kilowatts of wind power and 2.0312 million kilowatts of photovoltaics (including the purchase of 0.5677 million kilowatts of photovoltaics). The company also completed the transfer of Jiangyin Sulong Thermal Power, which reduced the installed thermal power by 1.215 million kilowatts. As of the end of September, the company held 37.0104 million kilowatts of installed capacity, an increase of 12.8% over the previous year; of these, the installed capacity of wind power was 28.3806 million kilowatts, thermal power 0.66 million kilowatts, and other renewable energy sources such as photovoltaics, and 7.9698 million kilowatts. In addition to the rapid increase in installed capacity, the wind also improved in the third quarter. The number of hours the company used wind power in the third quarter was 437 hours, down only 7 hours from the previous year, which is significantly narrower than the 87-hour drop in the second quarter. Thanks to this, the company completed 12.277 billion kilowatt-hours of wind power generation in the third quarter, an increase of 6.16% over the previous year, and the growth rate of power generation changed from negative to positive. In addition, the company generated 2.233 billion kilowatt-hours from other renewable energy sources in the third quarter, up 41.75% year on year, and the growth rate fell 33.67 percentage points from month to month. Thermal power generation in the third quarter was 2.255 billion kilowatt-hours, a year-on-year decrease of 13.86%. The main reason was that the transfer to the subsidiary Jiangyin Thermal Power was completed, and its electricity volume in September was no longer included. Overall, driven by steady growth in new energy electricity, the company completed 16.765 billion kilowatt-hours of power generation in the third quarter, an increase of 6.39% over the previous year. The company's revenue for the third quarter was 7.467 billion yuan, a year-on-year decrease of 9.87%. The main reason may be a decrease in revenue from the coal trading business, and the decline in market-based electricity prices may also have a certain impact on revenue.

Continued cost control and efficiency, and the third quarter results grew rapidly. Due to the reduction in the scale of the coal trading business, the company's operating costs in the third quarter were 5.058 billion yuan, a year-on-year decrease of 12.29%, greater than the decline in revenue, and the company's gross margin improved. However, due to the fact that the number of hours used for wind power still declined year on year and electricity prices were under pressure, gross profit for the third quarter was 2.409 billion yuan, down 4.34% year on year, and profit reduced by 0.109 billion yuan. Against the backdrop of pressure on the main business operations, the company strictly controlled costs. The total management expenses, R&D expenses and financial expenses for the third quarter were 0.997 billion yuan, a year-on-year decrease of 8.32%, and an increase of 0.09 billion yuan. Furthermore, thanks to the transfer of Jiangyin thermal power, the company achieved a net investment income of 0.514 billion yuan, an increase of 0.446 billion yuan over the previous year. Furthermore, the company's net income from fair value changes in the third quarter was 0.006 billion yuan, an increase of 0.077 billion yuan over the previous year. As a result, under the influence of multiple profit increases, the company's total profit for the third quarter reached 2.071 billion yuan, an increase of 32.52% year on year; net profit to mother was 1.648 billion yuan, an increase of 41.58% year on year.

The green power industry is in full swing, and the Group has once again fulfilled its injection promises. We always emphasized in “The Long Night Will Dawn, Let's Discuss New Energy Industry Chain Opportunities” in February that the construction and commissioning of UHV will ease the pressure on green power consumption, and that the expansion of green power transactions will become a key requirement for the green power industry to break the situation. Since this year, we have been able to clearly see positive changes at the policy level. The industry is about to stay awake. We are still optimistic about investment opportunities supported by the green power sector policy for a long time, and the company, as a green power leader, is expected to benefit deeply from the reversal of the bottom of the industry. At the same time, the company announced on October 22 that it plans to acquire the Group's new energy assets for 1.686 billion yuan. The target assets are 1.4469 million kilowatts in operation and 0.586 million kilowatts under construction; 1.316 million kilowatts of wind power and 0.7169 million kilowatts of photovoltaics. The acquisition of PB is only 1.07 times more cost-effective. The group once again fulfills the company's listing promise, and is expected to further increase the company's profits after this asset injection.

Investment advice and valuation: According to the latest financial data, we expect EPS to be 0.87, 0.97, and 1.08 yuan respectively in 2024-2026, corresponding to PE 19.68 times, 17.66 times, and 15.79 times, respectively, maintaining the company's “buy” rating.

Risk warning

1. The risk that the commissioning progress and benefits of new construction projects fall short of expectations;

2. Wind conditions and lighting resources fall short of expected risks.