SDIC Power released its three-quarter report: 3Q24 achieved revenue of 17.294 billion yuan (yoy +6.87%, qoq +33.09%) and net profit of 2.834 billion yuan (yoy +4.38%, qoq +65.91%). 1-9M24 achieved revenue of 44.395 billion yuan (yoy +4.34%), net profit of 6.578 billion yuan (yoy +8.69%), deducting non-net profit of 6.351 billion yuan (yoy +5.43%). 3Q24 net profit to mother is within our expected range of 2.766-3.152 billion yuan. Up to now, energy storage in the Yalong River has increased year on year. In particular, the two estuaries of the two estuaries of the regulated hydropower station are filling up for the first time, which is expected to increase the Yalong River's power generation this winter and spring. We are optimistic about the integrated development of the Yalong River's waterscape and the company's contribution to the cash flow of high-quality coastal thermal power, and maintain “purchases”.

Q3 In the context of abundant incoming water in the Guangxi region, SDIC Qinzhou electricity generation and electricity prices are under pressure, 3Q24's thermal power feed-in power generation was -5.79% to 15.124 billion kilowatt-hours, and China's Qinzhou power feed-in electricity generation capacity was -33.36% (down 1.341 billion kilowatt-hours) to 2.679 billion kilowatt-hours. It was mainly affected by the year-on-year abundance of incoming water from Guangxi. Hydropower squeezes thermal power generation capacity, but due to SDIC Qinzhou 2 power generation 2*0.66 million kilowatt units in December 2023 Since it was put into operation in April 2024, 3Q24 feed-in electricity increased by 0.695 billion kilowatt-hours year on year, and the company's total feed-in power in Guangxi region was -0.646 billion kilowatt-hours year on year.

SDIC Qinzhou Power Generation's 3Q24 feed-in price was -11.04% to 0.443 yuan/kilowatt-hour. In 3Q24, the company obtained non-recurring income of 0.202 billion yuan due to the disposal of illiquid assets and calculated asset/credit impairment losses of 0.161/0.037 billion yuan. The combined impact of the above three items on the company's performance was 0.004 billion yuan.

The year-on-year increase in energy storage in the Yalong River is expected to increase the power generation capacity of the Yalong River cascade power station by 3Q24 this winter and spring. The Yalong River hydropower feed-in capacity was +24.63% year-on-year to 33.543 billion kilowatt-hours, mainly due to the year-on-year abundance of incoming water. On October 25, the two estuaries of the Longtou Reservoir Power Station in the middle reaches of the Yalong River were filled for the first time since it was put into operation.

According to statistics from the Sichuan Hydrological Network, as of October 30, the amount of water stored at the Second Beach of the Yalong River/Jinping Level 1/+2% over the same period was +8%/+23%/+2% compared to 5.629/7.198/0.692 billion cubic meters. Energy storage in the Yalong River has increased dramatically over the same period last year, which is expected to increase the electricity generation capacity of the Yalong River cascade power station this winter and spring. In 3Q24, the electricity volume of hydropower in the Yalong River increased sharply year on year. There may be cases where the power generation capacity was exceeded. The feed-in electricity price was only -1.38% to 0.285 yuan/kilowatt-hour compared to the same period last year.

The target price is 17.77 yuan, maintaining the “buy” rating

Considering the downward trend in coal prices since this year, the unit price of imported standard coal and feed-in tariff expectations were adjusted, and the company's net profit returned to mother for 24-26 was lowered to 7.4/8.4/8.8 billion yuan (previous value: 7.9/9/9.7 billion yuan). Based on 25E thermal power net assets/clean energy net profit of 7.083/7.294 billion yuan, with reference to the coal-power/clean energy company's 25E PB/PE Wind's consistent forecast of 1.0/17.5x, considering that part of the company's clean energy profit was contributed by new energy sources and the company's outstanding profitability of coastal thermal power, the company was given 1.2/17.0x 25E PB/PE, with a target market value of 132.5 billion yuan, target price 17.77 yuan (previous value 17.81 yuan) ), maintaining a “buy” rating.

Risk warning: The rise in incoming shui/Liangyang power generation/market-based electricity prices fell short of expectations; the increase in coal prices exceeded expectations; progress in fixed increases fell short of expectations.