Main points of investment

Event: Jiangsu Guoxin released its three-quarter report in 2023, with a total operating income of 24.933 billion yuan in the first three quarters, + 2.17% year-on-year, 1.963 billion yuan in net profit, + 221.80% in the same period last year, and 1.873 billion yuan in non-return net profit, + 247.84% in the same period last year. 2023Q3 alone, the company's operating income is 9.645 billion yuan, + 1.67% compared with the same period last year, and its net profit is 845 million yuan, turning losses into profits over the same period last year. Our comments are as follows:

Power sector: downward fuel costs drive operating costs to 13.70% year-on-year-14.9% dome 2023Q3 gross profit margin + 4.74pct. The third quarter is the peak season for thermal power, so the company's total revenue increased by 19.02% month-on-month, with the expected load overall unchanged in 2022 and + 1.67% compared with the same period last year. The company's operating cost fell 14.9% from a year earlier to 8.137 billion yuan, which overall led to a further recovery of gross profit margin to 13.70%. The operating net cash flow of 2023Q3 company reached 876 million yuan, which was + 32.53% compared with the same period last year. In terms of the new project, the company, together with China Coal Power and Taineng, has a 51% stake in the No. 3 unit of the Guoxin Jingjiang 2*1GW coal power project, which will lead to the further expansion of the overall thermal power assets. The company is building coal power 5GW in the province, approving 1GW, and combined with the improvement of coal logistics guarantee of Qingang Port, the company still has the logic of medium-term dimensional growth.

Financial business: the investment income of 2023Q3 is-52.67% month-on-month, which is mainly brought about by the decline in investment income of financial assets. The company's financial sector assets take Jiangsu Trust as the main business body, while Jiangsu Trust participates in Jiangsu Bank, Lian Life Insurance and other companies. By the end of 2023Q3, the company achieved a cumulative investment income of 1.682 billion yuan in that year.

Investment advice: maintain the "overweight" rating. As a dual main business platform of "energy" and "finance" in Jiangsu Province, the company has a strong ability to expand assets in the energy sector, and the financial sector is profitable. We adjusted the company's net profit from 2023 to 2025 to 2.462 billion / 3.186 billion / 3.886 billion yuan respectively, which is + 3512.1%, + 29.4% and + 22.0% respectively compared with the same period last year. The PE valuation of the closing price on October 27 is 10.9x, 8.4x and 6.9x, respectively.

Risk hints: coal price fluctuations, load lower than expected, project construction less than expected, macroeconomic fluctuations