The amount of hydropower and electricity is declining, and pressure on fuel costs is still there. Net profit of Guimu declined 1-9M22 company revenue/net profit of Gimu to 202.3/1.84 billion yuan, +24.8%/-32.9% year on year; corresponding to 3Q22 was 6558/3.9 billion yuan, +15.9%/-63.7% year on year. The decline in net profit of 1-9M22 is mainly due to rising fuel costs for thermal power and a decrease in hydropower generation capacity. The company's coal trade revenue and the unit price of incoming coal were raised, and the hydropower generation capacity was lowered to 22.2/29.0/3.36 billion on 22-24 (previous value: 28.9/32.2/3.55 billion yuan). The company's net profit of new energy in 2022 was 8.1 billion yuan, and the net assets of hydropower/thermal power returned to the parent were 117/3.3 billion yuan. Referring to the comparable company Wind, the average value of 2022 EPE/PB/PB was 19/1.9/0.87x. Consider: 1) the company's new energy stock assets are profitable, but there is a gap between the future new scale of new energy companies; 2) the company's hydropower scale is small; 3) and the company's valuation includes new energy asset expectations, giving the company E PE/PB/202PB expectations 18/1.7/0.65x, the target market The value is 36.7 billion yuan, and the target price is 5.59 yuan, maintaining the “buy” rating.
The increase in revenue from coal trade led to a year-on-year increase in revenue. The unit price of imported coal may still be at a high level 1-9M22 Company's revenue increased 24.8% year-on-year, mainly due to: 1) the year-on-year increase in coal market prices and the company's coal trade volume, and the year-on-year increase in coal trade business revenue; 2) the year-on-year increase in feed-in prices for thermal power.
However, since the gross margin of the company's 1-9M22 coal trading business is only 1.6%, accounting for a small share of the company's profit, the revenue growth of the coal trade business contributed limited to the company's profit growth. The company's thermal power generation capacity increased 65%/25% year-on-year in August and September respectively. We judge that the 3Q22 company's thermal power generation capacity should have achieved a significant year-on-year increase. In 1H22, the company's thermal power sector had a net loss of 300 million yuan. Judging from the month-on-month trend of the unit price of fired coal disclosed by other thermal power companies, it is expected that the company's 3Q22 coal unit price may drop slightly month-on-month. While feed-in prices are still at a high level, the company's 3Q22 thermal power sector may reduce its losses on a month-on-month basis.
Hydropower generation capacity declined sharply year on year, and new energy power generation capacity grew rapidly. The company's hydropower generation capacity in August and September fell 57%/88%, respectively. We expect that the company's 3Q22 hydropower generation capacity may drop sharply year on year when incoming water depletion is severe, which will have a certain impact on the year-on-year decline in the company's profits. The company's new energy generation capacity in August/September increased 96%/26% year-on-year respectively to 44/ 330 million kilowatt-hours, which is expected to be mainly due to an increase in new energy installations. We expect the company to add 2.08 GW of new energy installations throughout this year.
The target price is 5.59 yuan, maintaining the “buy” rating
Due to the large increase in 1-9M22 coal trade revenue and the company's coal price still at a high level, and since July of this year, there has been a lot of incoming water from the basin where the company's hydropower plant is located, we raised the company's coal trade revenue and the unit price of incoming coal, and lowered the company's hydropower generation capacity, thus lowering the company's net profit forecast for 2022-2024 to 22.2/29.0/3.6 billion yuan. We expect the company's target market capitalization of 36.7 billion yuan, corresponding to the target price of 5.59 yuan, to maintain the “buy” rating.
Risk warning: Changxie coal security/rising coal and electricity prices/new energy development/incoming water falls short of expectations.