The scale of installed coal and electricity has expanded, and the recovery in electricity demand is favorable to the growth of power generation. Under the two-pronged approach of self-building+acquisition, the installed capacity scale of coal power holdings has been steadily expanding. Demand for electricity in Hebei has recovered, and the number of hours used by thermal power units has been rising steadily. The adjusted profit forecast is mainly based on: 1) the progress of the project under construction was better than expected, and the installed capacity was increased; 2) the forecast for coal prices was higher than expected, and the average standard coal unit price was raised.
We expect the company's net profit to be 3.67/587/863 million yuan in 23-25 years (previous value:
3.21/4.79/759 million yuan), BVPS 5.62/5.84/6.15 yuan (previous value: 5.59/5.77/6.05 yuan).
The fundamentals of the coal and power industry have bottomed out and rebounded. The company's 23-year performance is expected to improve, and the 23-25 performance flexibility is sufficient. Comparatively, the company's 24-year PB average was 1.1 x (Wind agreed), and the company's current stock price corresponds to 0.82xPb in 24. The company was given 1.1xPB for 24 years, with a target price of 6.42 yuan/share (previous value of 6.15 yuan based on 1.1xPB in 23 years). Maintain an increase in holdings rating.
Under the two-pronged approach of self-building+acquisition, Coal & Power Holdings has steadily expanded its installed capacity. Unit 2 of the 2x350MW low calorific value cogeneration project of the holding subsidiary Shouyang Thermal Power Construction passed a 168-hour full load test run on October 27, 2023, and was officially put into operation. Unit 1 of the project was put into operation on July 19, 2023. Since then, the Shouyang Thermal Power Project has all been completed and put into operation. The company's acquisition of 51% of Kailuan GCL's shares passed the shareholders' meeting vote on December 15, 2023, and is expected to add 600 MW of holding capacity. The new projects Renqiu Thermal Power and Xibaipo Power Plant Phase IV were approved in 1H23, and it is expected that the company's installed capacity will be further increased in the future. Therefore, we raised our forecast for the company's 23-25 holding installed capacity to 9.85/10.45/11.81 GW.
Electricity demand in Hebei has recovered, and the number of hours used by thermal power plants has steadily increased, and electricity demand in Hebei Province has recovered. From January to October 2023, the province's electricity consumption was +7.8% year-on-year. Considering the low base effect from November to December 2022, we expect the annual electricity consumption in Hebei Province to grow by a high number of units. Electricity generation in Hebei Province accelerated, with cumulative year-on-year growth of +5.9%/+7.1% in October/November, of which thermal power generation +3.8%/+4.6%, and the number of hours used by thermal power units in January-October was +1.2% year-on-year. The company's installed capacity accounts for 23.13% of the coal-fired power installed capacity of the Hebei South Grid and 20.10% of the Hebei North Grid. We expect that the number of hours the company's thermal power units will be used in the same way as the provincial average.
The company's coal price fluctuates relatively little, and the unit price forecast for rising standard coal prices
In 2022 and January-September 2023, the company's average standard coal unit price was 970/926 yuan/ton, respectively, +12%/-3%; during the same period, the Qingang Q5500 average price was +44%/-20% year-on-year, and the company's coal price fluctuated relatively little. Since October 2023, the average price of Q5500 in Qingang is -33% year-on-year. We expect the company's coal prices to drop slightly year-on-year during the same period and throughout the year, but higher than our previous forecast. Therefore, we raised our 23-25 average standard coal unit price forecast to 914/882/882 yuan/ton.
Risk warning: The increase in coal prices exceeded expectations, the number of hours used fell, and the progress of projects under construction fell short of expectations.