Report summary

Incident: The company released its 2024 three-quarter report. In the first three quarters of 2024, the company achieved revenue of 7.552 billion yuan, a year-on-year decrease of 12.11%; net profit to mother was 0.606 billion yuan, a year-on-year decrease of 34.57%; after deducting non-return net profit of 0.462 billion yuan, a year-on-year increase of 60.10%. Looking at the Q3 single quarter, the company achieved revenue of 2.849 billion yuan, a year-on-year decrease of 3.96%; net profit to mother of 0.195 billion yuan, an increase of 56.14%; net profit after deducting non-return to mother of 0.186 billion yuan, an increase of 183.74% year-on-year.

Significant improvement in Q3 performance and significant improvement in profitability

2024Q3 achieved revenue of 2.849 billion yuan, which was basically the same year on year, up 24.46% month-on-month, net profit of 0.195 billion yuan, +56.14% year-on-year, net profit after deducting 0.186 billion yuan, +183.74% year-on-year. The main reasons were: 1) the price of fuel such as coal fell year on year and the performance of stock power plants increased year on year; 2) distributed photovoltaic power plants, energy storage power plants and other projects continued to advance, and revenue and profit increased significantly year on year; 3) Cost-side financing structure adjustments It results in lower financial costs.

In terms of profitability, the 2024Q3 gross margin/net margin was 27.18%/7.67%, respectively. The asset structure was optimized compared to +10.20/+2.71 pcts, respectively. The industrial and commercial distributed/household photovoltaic business continued to gain strength. The company continued to cultivate cogeneration, further develop heat load users, and maintain a leading cost advantage by reducing costs and increasing efficiency. As of September 30, 2024, the total installed capacity of the company connected to the grid was 5976.36 MW, an increase of 20.7% compared with the end of June, including fuel engine cogeneration 2017.14 MW, photovoltaic power generation 2083.37 MW, wind power 817.85 MW, waste power generation 149 MW, coal-fired cogeneration 209 MW, and energy storage 700 MW; renewable energy installations further increased to 57.81%, compared with +0.98 pcts at the end of June, with the main increase coming from photovoltaics. In the first three quarters of 2024, “Xinyangguang” household photovoltaics shipped an additional 1081.62 MW and added 1015.33 MW connected to the grid; 365.26 MW of industrial and commercial distributed photovoltaics were added, adding 199.64 MW connected to the grid. Based on the electricity sales business, the “optical storage and charging conversion” integrated application scenario continues to improve the company's integrated energy solutions with integrated energy solutions such as “source-grid-charge-storage”, “light-storage-charge-calculation”, and “source-network-sale-use-use-cloud” to create a business model with diverse application scenarios for the transformation and upgrading of the comprehensive energy service business, and cultivate new momentum for growth. 1) Energy storage power plants: By the end of September '24, the company's independent energy storage projects had a total of 9.14 GW/17.89 GWh, which was included in the provincial power plan; 2) Virtual power plants: By the end of September 2024, the company's virtual power plant had an adjustable load scale of about 300 MW, with a market share of about 20% in Jiangsu Province and a demand response scale of about 500 MW. It is expected that the provincial and non-provincial markets will continue to expand in the future; 3) Multiple applications of integrated energy services: continue to expand electricity sales business based on superior customers, including electricity distribution and demand management, Innovative business models such as demand-side response and virtual power plants. From January to September 2024, the company's market-based transaction service volume was 20.268 billion kWh, and the total management capacity of power distribution projects was 3204 MVA; green power transactions were 0.339 billion kWh, the total electricity volume corresponding to domestic and international green licenses was 0.46 billion kWh, and the total electricity response capacity for auxiliary services was about 14 million kWh. By the end of the reporting period, the company had successfully put in operation more than 1,000 P computing power resources, while reserving inventory computing power and in-transit computing power. Energy+computing power collaborative development can be expected in the future; 4) Terminal charging: Currently, it is mainly aimed at commercial vehicles and driverless electric vehicles. By the end of September '24, the company had a total of 52 power exchange stations in operation.

Investment advice

The company is expected to achieve revenue of 10.696 billion yuan/11.876 billion/ 13.54 billion yuan, net profit of 0.984 billion yuan/1.227 billion yuan/1.451 billion yuan in 2024-26. The price-earnings ratio corresponding to the current stock price is 14.0X/11.2X/9.5X, maintaining a “buy” rating. Risk Alerts

Macroeconomic downturn; raw material price fluctuations; risk of changes in electric vehicle policies; customer development falls short of expectations; computing power business falls short of expectations, etc.