Net profit in the 3rd quarter of 2020 went up YoY by 125.2% to RMB823 mn, which was better than expected. The Compan/s revenue and earnings in the first 9 months met our expectation due to better-than-expected 3Q2020 operating performance. In the first 3 quarters of 2020. revenue increased 9.7% YoY to 82,532 mn and net earnings amounted to RMB2,345 mn( up YoY by 6.0%. Overall gross margin of the Company in 1M-9M2020 went down by 0.8 ppts YoY to 18.3% and its 3Q2020 quarterly gross margin was down by 1.8 ppts YoY to 15.6%.
Nationwide power sector investment in 1-10M2020 reached RMB684.2 bn, up YoY by 24.9%. Of which, power engineering investment went up YoY by 68.1% to RMB347.1 bn while power grid investment was down YoY by 1.3% to RMB337.1 bn. During the period, investment in hydro and wind power engineering surged YoY by 10.9% to RMB71,2 bn and by 126.7% to RMB 183.5 bn, respectively. Investment in renewables accounted for 92.2% of total spending of power engineering in 1-10M2020r and we expect that tie majority of power engineering investment will be spent on renewable energies in the next 5 years.
We reiterate the "Buy"' investment rating and maintain our TP of HKS3.25. We remain confident on the outlook of Shanghai Electric due to its strong recovery entering 2Q2020. The operations of the Company have largely returned to pre-pandemic levels. Our EPS estimates from 2020 to 2022 are RMB0.256, RMB0.294 and RMB0.334, respectively. The TP of HK$3.25 corresponds to 10.7x/ 9.3x/ 8.2x 2020-2022 PER or 0.6x/ 0.6x/ 0.6x 2020-2022 PBR.
2020年第三季度淨利潤同比增長125.2%，達到8.23億元，好於預期。由於2020年第三季度的運營業績好於預期，公司前9個月的收入和收益達到了我們的預期。2020年前3個季度。營收同比增長9.7%至825.32億元，淨收益達23.45億元(同比增長6.0%)。該公司2020年1月至9月的整體毛利率同比下降0.8個百分點，至18.3%，2020年第三季度毛利率同比下降1.8個百分點，至15.6%。
2020年1-10年全國電力行業投資6842億元，同比增長24.9%。其中，電力工程投資同比增長68.1%，至3471億元，電網投資同比下降1.3%，至3371億元。在此期間，水電和風力發電工程投資分別同比增長10.9%和126.7%，至712億元人民幣和183.5元人民幣。在1-10M2020r，可再生能源投資佔電力工程總支出的92.2%，我們預計在未來5年內，電力工程投資的大部分將花在可再生能源上。
我們重申“買入”的投資評級，並維持我們的TP為3.25港元。我們對上海電氣的前景保持信心，因為它進入2020年第二季度的強勁復甦。該公司的業務已基本恢復到大流行前的水平。我們對2020-2022年的EPS預估分別為0.256元、0.294元和0.334元。3.25港元的TP相當於2020-2022年的10.7x/9.3x/8.2x或2020-2022年的0.6x/0.6x/0.6x PBR。
