The location advantage is significant, and the joint venture enterprises contribute the main source of profits. Jingneng Electric Power is mainly engaged in thermal power business in North China. By the end of 2020, the company has a holding installed capacity of 16.73 million kilowatts, a holding capacity of 4.31 million kilowatts under construction, a rights and interests installed capacity of 19.09 million kilowatts, and a stake in a coal mine with a production capacity of 1800 million tons per year.
The company's units are mainly concentrated in the Beijing-Tianjin-Tangshan Power Grid. 80% of the units are located in coal-rich areas and 72% are cogeneration units. The average utilization hours in 2020 is 4742 hours, which is 526 hours higher than the national average utilization hours of thermal power. The company achieved operating income of 20.1 billion yuan in 2020, YOY9%; return net profit of 1.4 billion yuan, YOY1.8%. Among them, the company's investment income to the joint venture enterprise is 1.2 billion yuan (the acid thorn gou coal mine, which has a 24% stake, contributes about 360 million yuan).
The 27% rise in coal prices led to the return of 21Q1 to the net profit of YOY-86%. 21Q1, the YOY11%, of the company's online electricity is lower than the average of the thermal power industry, mainly because the company's cogeneration unit 20Q1 is less affected by the epidemic in the heating season, and the on-grid electricity price is YOY0.8% to 0.299 yuan / kWh. The 21Q1Query CCI5500 index rose 29% year-on-year, and the company's standard coal price increased by 26.8% year-on-year to 538 yuan / ton (the cost increased by about 0.034 yuan per kilowatt-hour over the same period last year). Considering the upward increase in electricity and coal prices, it is estimated that the cost of Q1 fuel will increase by about 870 million yuan.
The 21Q1 revenue of the company is 5.6 billion yuan, and the net profit of YOY12%, is 70 million yuan, YOY-86%. We believe that the trend of coal prices in 21 years is high before and after low, and the annual average price is close to last year. If the subsequent release of production leads to a decline in coal prices, the company is expected to release performance flexibility.
Announce the promise of a stable dividend, corresponding to the dividend yield of 4%. The company announces that the shareholders' return plan for 2020-2022 is that when the current year is profitable and the accumulated undistributed profits are positive, the average annual cash dividend is not less than 70% of the profits available for distribution in that year, and the dividend per share is not less than RMB 0.12 yuan (including tax). In 2020, the company plans to pay a dividend of 0.12 yuan per share, the same as in 2019; the dividend ratio is 57%, down 2pct from 2019.
According to the minimum dividend amount of 0.12 yuan per share, the company's dividend yield in 2021 will reach 4%. We believe that the company's commitment to stable dividends reflects that the company pays more attention to investor returns and further strengthens the attributes of public utilities.
Profit forecast and valuation. The company expects Huizhou thermal power unit # 2 (350,000 kilowatts) to be put into production in 2021, corresponding to a holding installed growth rate of 2%, followed by Jingtai Power Generation Phase II (1.32 million kilowatts) and Jingning Phase II (1.32 million kilowatts). We expect the company to realize the net profit of 13.9,25.3 and 3.05 billion yuan belonging to the owner of the parent company in 2021-23, and the corresponding EPS is 0.21,0.38,0.46 yuan. With reference to the comparable company's 14-fold PE valuation in 2021, and considering the enhanced utility attributes brought about by the company's promise of stable dividends, and the scale increment brought about by the operation of the machine under construction, the company is given a reasonable value range of 16-18 times PE, corresponding to 3.36-3.78 yuan in 2021, maintaining a rating that is better than that of the big market.
Risk tips. The macro-economic downturn brings pressure on the electricity consumption of the whole society; the market power transfer profit is further expanded under the power system reform; and the time point of the coal price decline is uncertain.