Net profit of 21H1 narrowed sharply, and rising coal prices dragged down profitability Construction Investment Energy released an interim report: 21H1 achieved revenue of 7.5 billion yuan, +4% year-on-year after traceability, and Guimo's net profit of 140 million yuan, -73% year on year; corresponding to 21Q2 revenue of 2.9 billion yuan, +1% year on year, Guimo's net profit - 160 million yuan, -240% year on year. The significant increase in coal prices in 2021 may drag down the annual profit performance, lowering net profit attributable to the mother in 21-23 to 2.4/59/ 960 million yuan, and BPS to 6.76/7.04/7.47 yuan. Referring to the average value of comparable PB of 0.8x, given the target PB of 0.8x in 2021, the target price was 5.40 yuan (previous value of 7.17 yuan, based on 1.0xPb in 2021). Concerned about the risk of rising coal prices, profitability was under pressure, and it was downgraded to the “increase in holdings” rating.
Electricity consumption has rebounded slightly, and the utilization rate of the unit is superior to the industry average
There was a slight recovery in power generation: On a comparable basis, 1H21's holding power generation capacity increased 6% year over year to 20.2 billion kilowatt-hours, and the power generation capacity of participating companies increased 9% year over year to 21.2 billion kilowatt-hours. The utilization rate of the unit is better than the national average: the average number of hours used in 1H21 was +80 hours to 2,212 hours compared to the national thermal power average, which is slightly higher than the national average for thermal power generation. The generator sets controlled by the company are all important power sources for the Hebei regional power grid, and they all meet the deep emission reduction standards of Hebei Province; as social electricity demand recovers, we expect the average number of hours used in the second half of the year to rise steadily.
Electricity prices and coal prices are under pressure, and gross margin has narrowed sharply
The average feed-in electricity price of 1H21 company was -2% to 358.58 yuan/MWH; the average price of standard coal was +150 yuan/ton to 703.55 yuan/ton year on year, an increase of +27% lower than the increase of Qinhuangdao Thermal Coal Q5500 (Qingang Q5500) over the same period (42%). Due to the double influence of electricity prices and coal prices, 1H21's gross electricity margin was -13.6pct to 13.4% year on year, and the gross thermal margin was -7.2 pct to -23.8% year on year. Considering that Qingang Q5500 has risen 66% year on year since July '21, coal prices are expected to rise sharply year on year throughout the year. The company's average coal price increase is expected to remain superior to industry levels, but profitability may continue to be under pressure.
Adjust the profit forecast and downgrade it to the increase in holdings rating
Taking into account the high level and fluctuation of coal prices, the assumption of higher coal prices was adjusted, and gross profit margin was lowered. We adjusted the company's net profit from 21-23 to $2.4/559/960 million (previous value: $9.8/1,13/1.30 billion), and BPS to $6.76/7.04/7.47 (previous value: $7.17/7.62/8.14). Comparable to the company's average PB in '21 (Wind's consistent expectations), the company's current stock price corresponds to 0.7xPb in '21. The company's thermal power assets were of high quality. The company was given 0.8 xPb in '21, with a target price of 5.40 yuan/share (previous value: 7.17 yuan, based on 1.0xPb in 2021), and downgraded to an increase in holdings rating.
Risk warning: risk of rising coal prices; risk of falling electricity prices; rising proportion of electricity transactions in the market.