Company overview: Gansu state-owned assets background, local hydropower leader

The controlling shareholder of the company is Gansu Electric Investment Group, and the actual control is Gansu Provincial State-owned assets Supervision and Administration Commission. The company is mainly engaged in hydropower and new energy development, as the acquisition of new energy projects is still going on, hydropower business contributes to the company's current revenue. Affected by the incoming water, 15H Company realized the return net profit of-68 million yuan, of which the contribution of holding power station and equity participation of Little three Gorges Hydropower Station to the return net profit was-96 million yuan and 28.86 million yuan respectively.

The scale of hydropower installation is stable, and the profit level is determined by incoming water and CDM revenue.

As of the first half of 2015, the total installed capacity of the company's rights and interests is 1.817 million kilowatts, the installed capacity of hydropower generation has reached 175000 kilowatts, and the installed scale is stable. After the Zamuhe Shenshu Hydropower Station is completed and put into operation in the future, the hydropower generation capacity of the company will mainly depend on the upstream inflow and CDM income. The company's CDM revenue fell sharply to 8.89 million yuan in 2014 from 144 million yuan in the same period last year, a decrease of 93.8% over the same period last year, resulting in a drop in electric net profit from 0.045 yuan to 0.022 yuan in 2014.

The company's layout of wind power photovoltaic projects, the acquisition of Jiuhui wind power orderly promotion.

In June 2015, the company issued a fixed increase plan (the second revision), which intends to raise a total of no more than 1.81 billion yuan to acquire Jiuhui wind power under the group and invest in the construction of subordinate power plants. Due to the limited influence of electricity in May 15 years ago, Jiuhui wind power lost about 9 million yuan, but with the promotion of power reform, the situation of power restriction is expected to be alleviated in the future. According to the profit of Jiuhui wind power units put into production in 2013, after all units are put into production in the future, Jiuhui wind power can achieve a net profit of about 112 million yuan a year and a net profit of about 109 million yuan.

The installed capacity of shareholders' residual rights and interests is about 2.2 times that of listed companies, and there is more room for injection.

By the end of March 2015, Gansu Dian Investment Group, the company's controlling shareholder, has a total installed capacity of 6.3166 million kilowatts of in-production rights and interests, which is about 3.6 times that of listed companies, and the remaining installed rights and interests in production is about 2.2 times that of listed companies, and there is more room for future asset injection. At present, the group has a total of five proposed power stations, and the installed scale of rights and interests is three times the size of listed companies, pushing up the space for capital injection.

For the first time, coverage gives a rating of "prudent overweight".

In July 2015, the company realized a net profit of 82.38 million yuan, and the total net profit in the previous July was 13.92 million yuan, which has successfully reversed losses. The company expects to achieve a net profit of 175 million yuan to 215 million yuan in 2015, up from 11.6% to 8.6% year-on-year in 2014 (198 million yuan). Excluding the injection of Jiuhui wind power assets, we expect the company's EPS to be 0.25,0.28,0.31 yuan respectively from 2015 to 2017, which corresponds to a 15-year price-to-earnings ratio of 37.7 times according to the closing price of 9.31 yuan on September 7, 2015. the market value of the corresponding unit is 3807 yuan per kilowatt. Compared with hydropower companies with similar market capitalization, the valuation level of the company is relatively high. Considering that there is more room for future asset injection, the company is given a "prudent overweight" rating for the first time.

Risk hint: the company's electricity generation and Jiuhui wind power profits are lower than expected.