The company's full-year net profit was 920 million yuan, an increase of 44.6% over the same period last year. The decline in coal-fired cost was the main reason for the performance growth. In the following year, it is optimistic that the participation in holding capacity will continue to grow, the number of hours will be repaired with demand, the risk of electricity price policy will be eliminated and the result of market-oriented transaction is expected to stabilize. The company is expected to make a net profit of 1.17 billion yuan in 2021-23, maintaining the target price of 7.8 yuan and maintaining a "buy" rating.
EPS in the fourth quarter was 0.06 yuan, slightly lower than expected. The company's 2020 operating income was 14.22 billion yuan, an increase of 1.8% over the same period last year; the net profit returned to the home was 920 million yuan, an increase of 44.6% over the same period last year; corresponding to EPS 0.52 yuan, an increase of 44.5% over the same period last year, the performance was slightly lower than expected. From a quarterly point of view, the company's 4Q2020 operating income was 4.32 billion yuan, up 14.2% from the same period last year; net profit from its mother was 100 million yuan, down 43.2% from the same period last year; and EPS in a single quarter was 0.06 yuan, down 43.9% from the same period last year. The company plans to pay a dividend of 0.17 yuan per share for the whole year, corresponding to a dividend ratio of 32.9%, which is the same as the same period last year.
Electricity fell slightly and fuel costs saved significantly. The company's holding subsidiary generated 39.16 billion kilowatt-hours of electricity in 2020, down 1.6% from the same period last year, and the revenue from electricity sales was 11.77 billion yuan, down 0.8% from the same period last year, reflecting the overall stability of electricity prices. On the cost side, the company's average comprehensive unit price of standard coal was 562.68 yuan / ton, down 43.47 yuan / ton or 7.1% from the same period last year, driving the comprehensive gross profit margin up 2.7% year-on-year to 20.8%, which became the main contribution to the high performance. 4Q2020, the company's comprehensive gross profit margin is 18.2%, a slight drop of 0.1% from the same period last year, which may be affected by the upward coal price and market-oriented electricity settlement at the end of the year. The company's annual investment income increased by 110 million yuan compared with the same period last year, reflecting the same good performance of participating thermal power and offshore wind power projects; but the investment income of 4Q2020 fell by 96 million yuan compared with the same period last year, mainly due to the advance of dividends of some participating companies to 3Q2020 recognition.
The operating cash flow is abundant, and the expense rate has increased slightly. The company realized net operating cash flow of 2.63 billion yuan in the whole year, an increase of 6.0% over the same period last year, and achieved positive free cash flow in successive years. The rate of management expenses in the company increased by 1.0 percentage point to 6.5% compared with the same period last year, mainly due to the rapid increase in the salary of employees. The financial expense rate was unchanged at 4.0% year-on-year, and the asset-liability ratio fell 0.5 percentage points year-on-year to 56.6%. The overall financing pressure is limited.
Landing projects one after another, the installation is expected to continue to grow. In March 2021, the company completed the purchase of 40% equity interest in Qinre Company from the controlling shareholder with 310 million yuan in cash, with a corresponding installed capacity of 550MW and 1.22 times the acquisition of PB.
At the end of September 2020, the company won the bid to acquire 30% equity in Shouyang Boqi, a subsidiary of Yangquan Coal Group, and 50% equity in Xishangzhuang low heat value coal thermal power project, with a total payment of 390 million yuan. After the completion of the two projects, the peer-to-peer network will send electricity to Hebei. In addition, the company's shareholding 2*1000MW in Yuxian, Shanxi Province is progressing smoothly, and all 75 offshore wind turbines of 300MW in Leting Bodhi Island, Tangshan are connected to the grid, which is also expected to contribute to the increase in investment income in the future.
Risk factors: power generation is lower than expected, coal price is higher than expected, feed-in electricity price is lower than expected, and the proportion of market electricity is higher than expected.
Investment advice. Considering the company's 2020 performance, the company's 2021-2022 EPS forecast will be reduced by 4% to 0.58 EPS 0.66 yuan, and the 2023 EPS forecast will be added to 0.67 yuan. The company's current stock price corresponding to 2020-2022 dynamic PE is 11-10-10 times. Maintain the target price of 7.8 yuan and maintain the "buy" rating.