Brief performance review

On April 26, 2024, the company disclosed its quarterly report. 1Q24 achieved revenue of 9.08 billion yuan, +25.6% year over year (after adjustment); net profit to mother of 780 million yuan, +202.9% (after adjustment); net profit without return to mother of 790 million yuan, +208.3% year on year (after adjustment).

Management analysis

1Q24 The increase in electricity consumption in Jiangsu and stable prices drive the company's thermal power performance growth, and the new unit can be expected to be released in 24 years. In 1Q24, electricity consumption in Jiangsu Province increased 11.6% year on year, 1.8 pct higher than the electricity consumption growth rate of China's entire society; under the tight balance of electricity supply and demand, monthly electricity transaction bids in the province remained at a level of 12%-14% higher than the benchmark price. After taking into account electricity prices and capacity electricity prices, the total feed-in tariff in Jiangsu is expected to increase steadily and slightly year-on-year. About 70% of the company's coal-fired power units are distributed in Jiangsu, and about 90% of the power generation from Shanxi coal power plants outside the province is also sent to Jiangsu. As a result, the increase in electricity demand in Jiangsu Province provides a guarantee for the company's thermal power business volume and price stability. In addition, the company's 9M23 Holdings Sheyang Port 1 million kilowatt coal power project has further amplified 1Q24's performance growth. It is expected that the Binhai Port Power Plant 2 x 1 million kilowatt unit will be put into operation by the end of '24, which will further unleash the momentum for performance growth.

The 1Q24 decline in coal prices+high base for the same period last year. Falling costs have continued to increase the profitability of thermal power. By the end of 1Q24, market coal prices had fallen further 11% from the beginning of '24, and since coal prices were still high in the same period last year, the 1Q24 market coal price center could drop 19% year on year; we expect the coal price center to decline year-on-year for the whole of '24, and the profitability of the company's main electricity business will continue to improve as costs improve.

The financial sector grew steadily and continued to contribute significant results. The company's financial business is mainly carried out by the subsidiary Jiangsu Trust. In 1Q24, Jiangsu Trust's trust business grew steadily, with processing fees and commission revenue +29.3% to 210 million yuan; Jiangsu Trust focused on the transformation direction of asset management, asset services and charitable trusts. In 23 years, it has assisted in issuing the country's first interbank market industrial park REITs, and businesses such as standard investment, ABS, and family trusts have developed rapidly. The steady development of the financial business in the future will create an important “safety cushion” for the company's performance.

Profit Forecasts, Valuations, and Ratings

It is expected that the coal price center of the market will continue to decline in the future. Binhai, Shazhou, and Guoxinjing Electric Power Units are scheduled to be put into operation one after another in 24-25, and the company's performance is expected to continue to grow in the next 2 years. We expect the company to achieve net profit of 30.9/3.47/3.76 billion yuan in 24-26, EPS of 0.82/0.92/1.00 yuan, respectively, and the current price of the company's stock corresponding to PE valuations of 10.1/9.0/8.3 times, respectively, to maintain an “increase in holdings” rating.

Risk warning

There is a risk that the installed capacity of thermal power and electricity will fall short of planned expectations, that coal prices will fall short of expectations, and that electricity prices will fall beyond expectations.