Event
Leshan Electric Power released an interim report in 2022 that the company's operating income from January to June in 2022 was 1.489 billion yuan, up 18.42% from the same period last year. The net profit attributed to the parent company was 86 million yuan, an increase of 2.62% over the same period last year. Net profit attributable to the parent company after deducting non-recurring profits and losses was 83 million yuan, an increase of 1.71% over the same period last year. By the end of June, the total assets of the company had reached 4.009 billion yuan, and the net assets belonging to the shareholders of listed companies were 1.806 billion yuan.
Comment
Revenue grew steadily in the first half of the year, and profits were under pressure.
From January to June in 2022, the company realized operating income of 1.489 billion yuan, up 18.42% from the same period last year; realized operating profit of 97 million yuan, up 5.30% from the same period last year; realized net profit belonging to the parent company of 86 million yuan, up 2.62% from the same period last year; and realized comprehensive gross profit margin of 21.39%, down 2.26% from the middle of 2021 and 1.95% from the whole of 2021. In the first half of the year, revenue grew steadily with the rise in business demand such as regional power supply, but the increase in the purchase of electricity and the average price of electricity purchase increased the pressure on the cost side, leading to only a slight increase in profits and a slight decline in profit margins. In the first half of the year, the company completed electricity sales of 2.049 billion kilowatt hours, an increase of 14.61 percent over the same period last year, gas sales of 92.85 million cubic meters, an increase of 3.24 percent, and water sales of 29.18 million cubic meters, an increase of 21.14 percent over the same period last year.
After years of accumulation, the company has formed a comprehensive livelihood service system dominated by electricity, natural gas and tap water supply in some districts and counties of Leshan City and Meishan City, Sichuan Province. In terms of power business, the company has a total installed capacity of 716800 kilowatts of spontaneous and grid-connected power stations; 22 110kV substations with a total capacity of 1.1632 million KVA; 47 110kV power grid lines with a total length of 709.54 km; and 98 35kV power grid lines with a total length of 673.37 km; by the end of June, it served a total of 498900 power users. In terms of gas business, the company has seven surge stations and more than 1200 km of pipelines, serving a total of 386000 gas users by the end of June. In terms of tap water business, the company has four water plants with a water supply capacity of 240000 cubic meters per day, 707.96 kilometers of water supply pipes above DN75, and 243000 tap water users by the end of June. A relatively complete comprehensive people's livelihood energy service system makes the company's regional service foundation more stable, and is expected to benefit from the increase in business demand such as electricity in the future.
Profit forecast
The company reported results slightly higher than we had expected, and we raised the company's profit forecast to a certain extent. We estimate that from 2022 to 2024, the company will achieve operating income of 29.53,34.05 and 3.909 billion yuan, net profit belonging to the parent company of 1.73,2.01 and 222 million yuan, and total share capital of 538 million shares, corresponding to EPS0.32, 0.37 and 0.41 yuan.
The main points of valuation are as follows: on September 2, 2022, the stock price is 7.18 yuan, corresponding to a market capitalization of 3.866 billion yuan, and the PE in 2022-2024 is about 22.29,19.24 and 17.43 times. The company's comprehensive livelihood energy service system such as hydropower and gas in the area is relatively complete, has a solid foundation for development, and is optimistic about the growth of regional electricity demand to drive the company's business development.
Risk hints: the growth of local electricity demand is not as expected, the development of regional industrial economy is not as expected, and the fluctuation of the epidemic situation is more than expected.