Brief performance review

On August 28, 2024, the company disclosed its semi-annual report. 1H24 achieved revenue of 17.78 billion yuan, +16.0% year-on-year; net profit to mother of 1.95 billion yuan, +74.2% year-on-year. Among them, Q2 achieved revenue of 8.7 billion yuan, +7.5% year-on-year; net profit to mother of 1.17 billion yuan, +35.9% year-on-year operating analysis

1H24 power generation has increased, and the price spike has driven the company's thermal power performance to grow, and the new unit can be expected to be released in the second half of the year. 70% of the company's coal motors in New York are distributed in Jiangsu; 1H24 electricity consumption in Jiangsu Province increased 9.0% year on year, 0.9 pct higher than the national average. The company's coal power generation capacity in Jiangsu Province was +11.1% year over year, and the average electricity sales price was 0.468 yuan/kwh, +0.9% year over year under tight balance between electricity supply and demand; the 1H24 power generation capacity of the company's domestic gas power units in the province was +32.9% year over year, and electricity price ratio remained +2.6% year over year; in addition, the 1H24 power generation rate of the company's electricity transmission unit outside the province remained +2.6% year on year, and the electricity transmission ratio remained at +2.6% year on year. Price ratio -6.4%. 1H24's total power generation capacity was +9.5% year over year, and the comprehensive electricity price remained flat, -1.4% year over year. The increase in performance was mainly due to the increase in power generation. In terms of installed capacity, the company's 9M23 Holdings Sheyang Port 1 million kilowatt coal power project has amplified 1H24's performance growth. It is expected that the commissioning of the Binhai Port Power Plant's 2×1 million kilowatt units by the end of '24 and the commissioning of the Shazhou and Jingjiang units in '25 will further unleash the momentum for performance growth. The coal price center continues to decline, and falling costs have continued to increase the profitability of thermal power. As of the end of 1H24, coal prices in the market fell further by 7.4% compared to the beginning of '24, and since coal prices were still high in the same period last year (especially Q1), the 1H24 market coal price drop could reach 13.8% year on year; under the cost, the gross margin of 1H24, the company's main electricity business increased 5.7 pct to 11.9% year on year. We expect the coal price center to continue to decline year-on-year in 24-26, and the profitability of the company's main electricity business will continue to improve as costs improve.

The financial business grew steadily, and the profit “safety cushion” acted as a “safety cushion”. The financial sector of 1H24 achieved revenue of 1.77 billion yuan (financial enterprise reporting caliber), +1.0% year over year, and realized total profit of 1.95 billion yuan, +14.9% year over year, accounting for 63.4% of the company's total profit. Jiangsu Trust, a subsidiary of 1H24, increased its holdings in the Bank of Jiangsu, became the largest shareholder, and launched the first listed company administrative management service trust - Chuangfu No. 2, the first guaranteed housing inclusion financial service trust “Jiangsu Trust Inclusive Financial Services Trust No. 1”, and established the first large-scale provincial enterprise charitable trust “Suxin Hongshan · Guoxin Group No. 1 Charitable Trust” to continue to build a characteristic product line of asset management trusts to actively promote the net value transformation of standard trust.

Profit Forecasts, Valuations, and Ratings

Considering the decline in coal prices and the successive commissioning of new units in the “14th Five-Year Plan”, the company's main thermal power business performance is expected to achieve steady growth. We expect the company to achieve net profit of 3.07/3.42/3.52 billion yuan in 24-26, EPS of 0.81/0.91/0.93 yuan respectively, and the current price of the company's shares corresponding to PE valuations of 8.3/7.5/7.3 times, respectively, maintaining an “incremental” rating.

Risk warning

The progress of the new project fell short of expectations; demand for thermal power in the province fell short of expectations; the signing and implementation of contracts by the General Coal Association fell short of expectations, and the decline in coal prices fell short of expectations; financial business profit stability was insufficient.