Incident: On April 26, the company released its report for the first quarter of 2024. During the reporting period, it achieved total revenue of 9.081 billion yuan, an increase of 25.56% over the previous year (as restated); net profit to mother of 779 million yuan, an increase of 202.87% (as restated); net profit after deducting non-return to mother of 795 million yuan, an increase of 208.29% year on year (as restated).
Full power, high revenue growth: In 2024, Jiangsu's annual transaction weighted average price was 0.4529 yuan/kilowatt-hour (excluding capacity compensation), down 1.37 points/kilowatt-hour, a year-on-year decrease of 2.9%; in the first quarter, the average monthly centralized electricity price in the province was 0.4433 yuan/kilowatt-hour (excluding capacity compensation), down 2.55 minutes/kilowatt-hour from year to year, a decrease of 5.4%; in the first quarter, the average electricity price reduction was 1.82 cents/kilowatt-hour. However, it is still manageable, so the increase in revenue is mainly due to high electricity consumption increase. In September 2023, the company's Sheyang Port Power Plant's 1 million kilowatt secondary reheating supercritical coal-fired generator set was officially put into operation. The company's coal power installed capacity in Jiangsu reached 8885 million kilowatts; 2024Q1 Jiangsu's thermal power generation capacity was 120.26 billion kilowatt-hours, up 11.3% year on year. Considering the incremental contribution of the new units, the company's thermal power generation rate in Jiangsu Province is expected to be higher than the provincial average; in the same period, the thermal power generation capacity of Shanxi Province was 95.66 billion kilowatt-hours, up 3.8% year on year. On the cost side, the average liquidation price of the 2024Q1 Q5500 Q5500 Qinhuangdao Port was about 902 yuan/ton, a year-on-year decrease of 20.1%; benefiting from improved fuel costs, the Q1 company's overall gross margin increased 9.1 percentage points to 12.0% year on year, and the net sales margin was raised to 12.34%.
Changes in shareholding ratio disrupted investment income: 1Q23 Jiangsu Trust held 8.17% of shares in Bank of Jiangsu, and we estimated the current confirmed investment income of 692 million yuan (investment income = net profit* shareholding ratio); considering the share capital expansion brought about by the Bank of Jiangsu Bank's convertible debt-to-share swaps, 1Q24 Jiangsu Trust's shareholding with the Bank of Jiangsu fell to 6.58%. We estimated the current confirmed investment income of 613 million yuan, a year-on-year decrease of 11.5%; Q1 Company achieved investment income of 482 million yuan, a year-on-year decrease of 0.65 million yuan. Yuan, the decline narrowed, or was mainly due to the remaining participating companies contributing positive investment income.
Investment advice: The optimization of the electricity and coal procurement structure is compounded by the rapid decline in thermal coal prices, and there is still room for continuous improvement in the company's thermal power performance. Maintaining the company's profit forecast, it is estimated that the company's EPS for 24/25/26 will be 0.73/0.89/1.01 yuan, respectively, corresponding to the closing price of PE 11.4/9.3/8.2 times on April 26, 2024. Referring to the company's historical valuation level, the company will be given 12.0 times PE in 2024, with a target price of 8.76 yuan, maintaining a “careful recommendation” rating.
Risk warning: 1) rising fuel costs; 2) insufficient electricity consumption; 3) delays in the payment of subsidies.