occurrences
Shenzhen Energy released its 2018 semi-annual report. Guimu's net profit increased 33.16% year on year. Shenzhen Energy & Electric released the 2018 semi-annual report. The company achieved operating income of 7.98 billion yuan in the first half of 2018, an increase of 29.26% over the previous year; net profit attributable to shareholders of listed companies was 537 million yuan, an increase of 33.16% over the previous year. The weighted average ROE was 2.49%, up 0.64 percentage points from the previous year.
Brief review
The power generation business has clearly picked up, ensuring high revenue growth
In the first half of 2018, the electricity consumption of the whole society in Guangdong Province increased 9.28% year on year, and the growth rate increased 4.69 percentage points over the same period last year. The electricity supply and demand situation in the region where the company is located continues to improve, leading to a clear recovery in the power generation business. The company achieved 16.539 billion kilowatt-hours of feed-in electricity in the first half of the year, an increase of 35.05% over the previous year. The increase in power generation contributed to the company's electricity sales revenue of 6.913 billion yuan, an increase of 24.39% over the previous year. The recovery in the power generation business clearly contributed significantly to the company's revenue growth.
Higher coal prices push up operating costs, and profit growth falls short of revenue growth
By the first half of the year, the company had put into operation a holding capacity of 9.8593 million kilowatts of installed capacity, including 4.914 million kilowatts of coal-fired units; coal power feed-in capacity accounted for 64.85%, and power generation business performance was greatly affected by fluctuations in coal prices. In the first half of 2018, coal prices remained high. The electricity and coal price index in Guangdong Province averaged 643.96 yuan/ton, an increase of 4.2% over the previous year. Higher coal prices have led to an increase in the company's fuel costs, and the gross margin of the power business fell 1.11 percentage points year over year to 20.1%. The company achieved operating profit of 727 million yuan, an increase of 23.3% over the previous year, and the growth rate of operating profit fell short of revenue growth.
When the US Zion project ends and the clean energy layout is underway
The company terminated the acquisition of the three photovoltaic stations of the Zion Project (with an installed capacity of 393,700 kilowatts) for the Zion Project due to failure to pass approval by the US Foreign Investment Review Committee within the agreed time. There have been no capital transactions in this acquisition and will not have a significant impact on this year's business performance. The company has accelerated the deployment of clean energy and invested in two wind power projects in Dengyunshan and Shanxian, with an installed capacity of 50,000 kilowatts each; the Fengxian PV Project (10,000 kilowatts) and the Changyang Project's improved gas-steam combined cycle generator sets (2*390,000 kilowatts). The company's overseas Lam Phase II 180,000 kilowatt hydropower project in Papua New Guinea is also being actively promoted. In August of this year, the company acquired 100% of the shares in Suining Artes, adding another 30,000 kilowatts to the PV installation. The company's clean energy installation ratio will further increase in the future, and power supply structure optimization will promote the sustainable development of the company's power business and effectively reduce the impact of fluctuations in coal prices on the company's performance.
The thermal power sector is endemic and endogenous, waiting for a fall in coal prices to bring about performance elasticity
The company plans to invest in the construction of two 1 million kilowatt coal-fired units in the second phase of the Heyuan Power Plant. The high-parameter, high-capacity thermal power units have high power generation efficiency and low pollution emissions, which will help the endogenous optimization development of the company's thermal power business. The company completed the acquisition of 100% of the shares of Korla Xinlong Thermal Power Company. This acquisition will help the company build a complete cogeneration industry chain locally and enhance the economy of cogeneration and the safety and reliability of its cogeneration supply. Currently, coal prices are at a high level. If coal prices fall further into the green range in the future, the company's layout in the thermal power sector is expected to bring greater performance flexibility to the company.
Diversified layout guarantees performance growth and maintains holdings growth ratings
Recently, the company announced that its holding subsidiary Mawan Company will temporarily sell Power Garden Phase II residential buildings No. 3 and 4 and the residential portion and supporting businesses of the 5A and 5B buildings for 1,741 billion yuan and 1,889 million yuan respectively. It is estimated that the net profit of FuMu in 2018 and 19 will be increased by 440 million yuan and 480 million yuan respectively. At the same time, the company plans to invest in the Nanshan project, with a total investment of 1,696 billion yuan, which will help the company further explore and develop existing land resources and preserve and increase the value of land resources.
In addition, the company obtained an environmental power generation franchise in downtown Chaozhou, and the scale of the solid waste treatment industry went even further. The company currently has a waste incineration power generation processing capacity of 9050 tons/day, and the processing capacity of projects under construction is about 13,000 tons/day. In the urban fuel sector, the company acquired 65% of the shares of Zhoushan CNPC Kunlun Energy Co., Ltd. and 83% of the shares of CNOOC Chaozhou Energy Co., Ltd. Energy, environmental protection and energy and gas are expected to become the company's new core business after the power sector.
Considering the continuous improvement in electricity supply and demand in Guangdong Province, the company's energy structure has been further optimized and endogenous dynamics are good. We forecast the net profit of the company to be 1,347 billion yuan, 1,424 million yuan and 1,426 billion yuan respectively in 2018-2020. The corresponding EPS will be 0.34 yuan, 0.36 yuan and 0.36 yuan respectively, maintaining the increase in holdings rating.
