\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 642 Shenergy Company Limited(600642) )
Event overview: the company held a meeting of the board of directors, deliberated and approved the proposal on the company’s provision for asset impairment, and appointed Chen Tao as the vice president of the company (presiding over the work).
The provision for impairment of Wuzhong thermal power exceeded 500 million. In 2021, the company plans to recognize various impairment of 517 million yuan, of which, except for the credit impairment of 4.59 million yuan, all are the asset impairment of Ningxia Wuzhong thermal power, the holding power plant. Wuzhong thermal power was acquired from Gd Power Development Co.Ltd(600795) , in 2015. Due to the low electricity price and heat price in Ningxia, and the coal-fired cost is greatly affected by market fluctuations, it has continued to suffer losses since it was completed and put into operation at the end of 2016, but no impairment has been accrued previously for some reasons. In 2021, under the unprecedented pressure of high coal prices, Wuzhong power plant suffered a significant loss to negative net assets. Therefore, an impairment of 512 million yuan was accrued after impairment test and evaluation.
The asset structure is excellent and the risk is relatively controllable. Different from other thermal power enterprises whose performance fluctuates greatly affected by coal price, the thermal power sector of the company operates steadily. Because the coal consumption is far lower than the industry average, the coal power sector can ensure profitability even in the period of relatively high coal prices. Although there is a loss in extreme cases in 2021, the situation is still better than that of most peers. In addition, the capacity, electricity price and gas source of the two-part system are self-sufficient, so as to ensure that the income and cost are controllable, and the company’s gas and electricity sector can maintain its income in drought and flood; The coal, gas, water, nuclear and wind power generation enterprises and other financial assets with equity participation realize an average annual investment income of about 1.4 billion yuan, accounting for more than 40% of the operating profit, and the volatility is small.
New energy is profitable and developing rapidly. With the expansion of installed capacity and the decline of coal power sector, new energy has made a significant contribution to the company’s profits. The projects under construction have been put into operation one after another with abundant cash flow. The company’s “14th five year plan” specifies that the annual average installed capacity of 1.6-2.0gw of wind and light is increased, and the CAGR in five years is about 40%. It is estimated that by 2025, wind and light will account for more than half of the company’s installed capacity and about one third of the power generation.
Investment suggestion: the company’s “14th five year plan” is clear, and the management adjustment is in place one after another. After putting down the burden, we can better promote the dual carbon goal. Adjust the profit forecast of the company according to the impairment. It is estimated that the EPS in 21 years is 0.39 yuan (the previous value is 0.49 yuan), and the EPS forecast value in 22 / 23 years is 0.70/0.73 yuan unchanged. The corresponding closing price PE on March 8 is 16.5/9.3/8.8 times respectively. Considering the recent stock price adjustment of thermal power sector, the company is given 12 times PE in 2022 and the target price is 8.40 yuan, maintaining the “recommended” rating.
Risk tips: 1) macroeconomic pressure reduces power demand; 2) Rising fuel prices increase operating costs; 3) Electricity market competition reduces the on grid price; 4) Adjust the supply structure and suppress the output of the unit.
