Core views

In the first three quarters of 2024, the company achieved operating income of 66.331 billion yuan, an increase of 14.65% year on year; net profit to mother was 28.025 billion yuan, an increase of 30.20% year on year. The year-on-year increase in the company's operating performance was mainly due to abundant incoming water in the first three quarters, and the year-on-year increase in the company's hydropower feed-in capacity. In the first three quarters of 2024, the total power generation capacity of the company's six cascade power plants was about 235.814 billion kilowatt-hours, an increase of 15.97% over the same period last year; in the third quarter of a single year, the company's total power generation capacity reached 115.196 billion kilowatt-hours, an increase of 15.05% over the previous year. In terms of the period expense ratio, 2024Q3 company's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.19%, 1.33%, 0.53%, and 12.75%, respectively, with year-on-year changes of -0.03, -0.07, +0.12, and -3.56 percentage points. Thanks to the reduction in financial costs, the company's financial expenses decreased year-on-year. Overall, with the successive operation of the company's on-hand savings programs, the company's high-quality cash flow assets will further increase. Combined with the reasonable layout of the company's diversified business, business performance is expected to maintain a steady growth trend.

occurrences

The company released its report for the third quarter of 2024

In the first three quarters of 2024, the company achieved operating income of 66.331 billion yuan, up 14.65% year on year; net profit to mother of 28.025 billion yuan, up 30.20% year on year; net profit after deducting non-return to mother of 27.984 billion yuan, up 30.42% year on year; net profit to mother of 166. 6.3 billion yuan, up 31.81% year on year; achieved a weighted return on net assets of 13.54%, an increase of 3.01 percentage points year on year; achieved basic earnings per share 1.15 yuan/share, a year-on-year increase of 30.20%.

Brief review

Lai Shui Bianfeng's operating performance improved steadily. Cost pressure dropped and financial expenses fell year on year in the first three quarters of 2024. The company achieved operating income of 66.331 billion yuan, an increase of 14.65% year on year; net profit to mother was 28.025 billion yuan, an increase of 30.20% year on year. The year-on-year increase in the company's operating performance was mainly due to abundant incoming water in the first three quarters, and the year-on-year increase in the company's hydropower feed-in capacity. Looking at the third quarter of a single quarter, the company achieved operating income of 31.522 billion yuan, an increase of 17.27% year on year; net profit to mother was 16.663 billion yuan, an increase of 31.81% year on year.

In the first three quarters of 2024, the total power generation capacity of the company's six cascade power plants was about 235.814 billion kilowatt-hours, an increase of 15.97% over the same period last year. In terms of the cost ratio for the period, the sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio of the 2024Q3 company were 0.19%, 1.33%, 0.53%, and 12.75%, respectively, with year-on-year changes of -0.03, -0.07, +0.12, and -3.56 percentage points. Thanks to the reduction in financial costs, the company's financial expenses decreased year-on-year. 2024Q3, the company's financial expenses were 8.597 billion yuan, a year-on-year decrease of 10.35%. In terms of foreign investment, in the first three quarters of 2024, the company achieved a net investment income of about 4.266 billion yuan, an increase of 11.41% over the previous year.

The incoming water situation improved year on year, and total power generation increased year on year

Thanks to abundant water since 2024, the total power generation capacity of the company's six cascade power plants in the first three quarters was about 235.814 billion kilowatt-hours, an increase of 15.97% over the same period last year. Looking at the third quarter of a single year, the company's total power generation capacity reached 115.196 billion kilowatt-hours, an increase of 15.05% over the previous year. According to company statistics, in the first three quarters of 2024, the total amount of incoming water from Wudongde Reservoir was about 88.852 billion cubic meters, which was 12.56% higher than the same period last year; the total amount of incoming water from the Three Gorges Reservoir was about 313.11 billion cubic meters, 20.26% higher than the same period last year. Specifically, the power generation capacity of the company's Wudongde, Baihetan, Xiluodu, Xiangjiaba, Sanxia and Gezhouba power plants from January to September was 311.76, 464.64, 490.04, 266.43, 685.39, and 13.989 billion kilowatt-hours, respectively, up 16.54%, 9.43%, 22.49%, 14.34%, 18.89%, and 6.25% year-on-year.

The storage project continues to advance, and the operating performance continues to grow steadily. The “Buy” rating company's pumped energy storage business continues to advance. In addition, the Zhejiang Tiantai Pumping Station has completed preparations for electricity production, the Chongqing Fengjie Caiziba Pumping Station has completed investment decisions, and the Guanghanping Pumping Station in Youxian County, Hunan has completed equity transformation and investment decisions. With the successive operation of the company's on-hand savings programs, the company's high-quality cash flow assets will further increase. Combined with the reasonable layout of the company's diversified business, business performance is expected to maintain a steady growth trend. We expect the company's revenue from 2024 to 2026 to be 87.728 billion yuan, 89.593 billion yuan, and 91.554 billion yuan respectively; net profit to mother will be 33.754 billion yuan, 35.638 billion yuan, 37.392 billion yuan, EPS will be 1.38 yuan/share, 1.46 yuan/share, and 1.53 yuan/share, respectively, maintaining the “buy” rating.

Risk analysis

Risk of incoming water from the Yangtze River: The six cascade hydropower plants in the company are distributed in the middle and upper reaches of the Yangtze River. Incoming water from the Yangtze River has a great impact on power generation, and the uncertainty of incoming water will affect the company's electricity production.

Production safety risks: New power systems require higher peak frequency modulation and peak power generation capacity of hydropower plants. Hydropower plants have large capacity and quantity, many types of equipment, long operating cycles, difficult equipment operation and management, and safety risk prevention and control challenges are more serious.

Electricity market risk: The country is speeding up the construction of a unified national electricity market system and speeding up the planning and construction of a new energy system. The macroeconomic situation and climate change have also made electricity demand difficult to predict.

Investment control risk: Global economic growth is slowing down and domestic economic restructuring. The company's foreign investment must take into account various factors such as changes in the domestic and foreign political environment and capital market, and increased market competition, making it more difficult to invest abroad.