The results of the three quarters report are lower than expected, but we are optimistic about the ongoing capital operation of the company. with reference to the performance commitments of the injected assets, it is estimated that in the next three years, the EPS will be 0.34,0.45,0.47 yuan, and the corresponding price-to-earnings ratio will be 16.6,12.6,12.0 times.

The performance was lower than expected. The third quarterly report showed that the operating income was 4.62 billion yuan, an increase of 4.2% over the same period last year, and the net profit attributed to the parent company was 306 million yuan, up 6.85% from the same period last year, and earnings per share was 0.27 yuan, of which the operating income of Q3 was 1.5 billion yuan, down 1.5% from the previous month, and the operating profit was 110 million yuan. the net profit attributable to the company was 96 million yuan, an increase of 15.9% over Q2.

Compared with the explosive growth of the thermal power industry as a whole in the third quarter, the company's performance is obviously much lower. The main reason is that, on the one hand, the company's power generation hours have decreased, and the power generation has not gone up, such as 2.87 billion kilowatt-hours of electricity generation in the first half of the year, a sharp drop of 18.6%; on the other hand, in history, the company's coal procurement is mainly long-contract coal from Yangquan coal industry. prices have been low, so in the context of falling coal prices, the performance elasticity brought by coal prices is lower than the industry average.

Performance will still be affected by the reduction in electricity prices. Recently, the on-grid tariff adjustment standard of the company's sunshine power company is 0.4014 yuan per kilowatt-hour (including tax), a reduction of 0.90 cents per kilowatt-hour, which is expected to affect business income of 11 million yuan. However, there is still downward pressure on electricity prices in the future.

With strong performance certainty, the company intends to acquire the group's coal assets, and the major shareholders make future performance commitments to the injected assets. The company already has power generation, power distribution and gas business, and the injected coal assets have high profitability, which can enhance the overall profitability of the company. In 2014, 2015 and 2016, the net profit of the owner of the parent company that International Power promised to inject into the underlying asset rights and interests was not less than 10.2,12.6 and 1.31 billion yuan respectively. Shareholders also promised to make a profit of about 89 million yuan in the next three years.

Profit forecast and rating have strong defense value. With reference to the performance commitment of the acquired assets, considering the full dilution of additional shares in the next two years, the EPS in 2013, 2014 and 2015 will be slightly reduced to 0.34,0.45,0.47 yuan, corresponding to a price-to-earnings ratio of 16.6,12.6 and 12.0 times, the valuation is below the industry average, taking into account the certainty of future performance and group injection expectations, maintain the "highly recommended-A" rating.

Risk hint: macroeconomic recovery is weaker than expected; uncertainty in asset acquisition