\u3000\u3000 China Yangtze Power Co.Ltd(600900) (600900)
Event:
China Yangtze Power Co.Ltd(600900) released the annual performance express of 2021. In 2021, the company achieved a total operating revenue of 55.69 billion yuan, a year-on-year decrease of 3.6%, of which the revenue in the fourth quarter increased by 2.1% year-on-year; The net profit attributable to the parent company was 26.447 billion yuan, a year-on-year increase of 0.57%, of which the net profit attributable to the parent company in the fourth quarter was 6.88 billion yuan, a year-on-year increase of 13.78%, which was significantly accelerated compared with the first three quarters.
Key investment points:
In 2021, the net profit increased steadily, of which the net profit attributable to the parent company increased by 13.79% in the fourth quarter. In 2021, the total operating revenue decreased slightly, mainly due to the year-on-year dry water from the Yangtze River and the water storage of new power stations in the upstream. The total annual power generation of the company’s four cascade power stations was 208.322 billion kwh, a decrease of 8.2% over the same period of the previous year. In the fourth quarter, the revenue and net profit recovered significantly, mainly due to the increase in the performance of the company’s investment business, international business and entrusted operation and maintenance business of power stations, which made up for the performance impact of the decrease in electricity sales. In addition, the company’s power generation in the fourth quarter increased by 0.09% year-on-year, narrowing the decline of power generation in the whole year.
Wudongde and Baihetan Hydropower Stations have been put into operation successively, and the company’s strategic layout has been upgraded to “joint commissioning of six reservoirs”. The first two units of Wudongde Hydropower Station will be put into operation in June 2020. Up to now, all units have been put into operation for power generation; The first four units of Baihetan Hydropower Station have been put into operation on June 28, 2021. On January 18, 2022, the rotors of 16 million KW water turbine generator units of Baihetan Hydropower Station were hoisted, and all units were put into operation. The power generation capacity of the units put into operation exceeded 10 billion kwh. In the future, with the units of Wudongde and Baihetan Hydropower Stations successively put into operation for power generation, the strategic layout of the company will be upgraded from “four depot joint commissioning” to “six depot joint commissioning”, and the installed capacity and power generation will be further improved after asset injection.
The scale of long-term investment continued to expand, and the investment income thickened the company’s profit. As of the mid-term report of 2021, the book value of the company’s long-term investment has exceeded 59.2 billion, and the proportion of long-term investment in total assets has reached 17.8%. Among them, the increase of holdings of SDIC and Sichuan investment and the acquisition of equity of Jinzhong company in 2019 have significantly increased the book value of the company’s long-term investment. The scale of long-term investment continued to expand and significantly thickened the investment income. In the first half of 2021, the investment income reached 3.8 billion yuan, a year-on-year increase of 70%, accounting for 37.4% of the pre tax profit. Previously, the proportion of investment income in the pre tax profit has exceeded 10% for three consecutive years.
Profit forecast and investment rating
China Yangtze Power Co.Ltd(600900) is the largest listed hydropower company in the world. Its net profit increased steadily in 2021. Wubai hydropower station will be put into operation soon. After asset injection, the installed capacity and power generation will be further improved. Regardless of wubai injection for the time being, it is expected that the company will realize a net profit attributable to the parent company of RMB 26.447/270.33/28.049 billion, EPS of RMB 1.16/1.19/1.23 and PE of 19 / 18 / 17 times from 2021 to 2023. It will be covered for the first time and rated as “overweight”.
Risk tips
The macroeconomic downturn, fiscal and tax policy adjustments, the water supply is not as expected, the production progress is not as expected, the safe operation risk of new units, the promotion of power rationing and other businesses is not as expected, and the asset injection is not as expected.
