Core ideas:
Hydropower and green power contribute mainly to profits, while thermal power losses are a big drag. 2022H1 achieved an operating income of 13.649 billion yuan (year-on-year + 29.6%) and a net profit of 1.444 billion yuan (year-on-year).
Hydropower and green power contributed more than 80% of the profits, of which the net profits of Qingjiang Hydropower and New Energy (both wholly-owned) reached 9.04 yuan and 314 million yuan respectively (+ 16.8% and-9.2% respectively compared with the same period last year), but the net profit of thermal power was-304 million yuan (year-on-year-507 million yuan). The corresponding return net profit is about-200 million yuan. The company's 2022H1 operating cash flow is 4.744 billion yuan (+ 59.9% compared with the same period last year), and the final asset-liability ratio is 51.4%.
Water and fire complement each other and fluctuate smoothly, and the power generation of new energy has increased by 57%. 2022H1 company controls the installed capacity to 11.91GW, and clean energy accounts for 64.2%. In the first half of the year, the company achieved 17.741 billion kilowatt-hours (- 6.8% compared with the same period last year); of which hydropower generation was + 10.1% year-on-year, but then Qingjiang water dried up in July-August; thermal power generation was-24.73% year-on-year. With the continuous strengthening of the national thermal coal supply and price stabilization policy, the company's thermal power profits are expected to continue to improve in the second half of the year, and the company is expected to put into production of 2GW ultra-supercritical units in 2023; new energy generation is + 57.1% year on year. The increase in thermal power price and the increase in the share of new energy drive the company's average electricity price to be + 7.7% compared with the same period last year.
There is a large space for the growth of new energy, and pumped storage has already stored 7.4GW. The company plans to have a total installed capacity of 22GW at the end of the 14th five-year Plan, including more than 15GW for renewable energy, and more than 8GW for new energy installation (2.08GW is planned for 2022). The installed CAGR of new energy will reach 45.3% from 2021 to 2025. At the same time, the company actively arranges pumped storage and has stored 5 projects with a total installed 7.4GW, of which the Luotian Pingtanyuan and Changyang Qingjiang pumped storage power station projects have been approved, and the Nanzhang Zhangjiaping project has completed the pre-feasibility study.
Profit forecast and investment advice. It is estimated that the return net profit of the company in 2022 to 2024 is 2.05 trillion yuan, respectively, and the PE corresponding to the latest closing price is 13.8, 11.3 and 9.8 times, respectively.
The company's hydropower business profits are stable, thermal power profits are expected to improve, new energy + pumped storage growth space. With reference to the industry valuation, give the company 15 times PE valuation in 2022, corresponding to the reasonable value of 5.70 yuan per share, and maintain the Hubei energy "buy" rating.
Risk hint. The project construction is not as expected; the incoming water fluctuates; the coal price rises sharply and so on.