\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 011 Huaneng Power International Inc(600011) )
Coal prices rose sharply year-on-year, with a significant loss in 2021. In 2021, the company achieved operating revenue of 204605 billion yuan (+ 20.75%). Affected by the sharp rise in coal purchase price year-on-year, the company’s annual performance loss, the net profit attributable to shareholders of the parent company was -10.264 billion yuan (- 324.85%), and the earnings per share was -0.79 yuan. In 2021q4, the average purchase price of China’s coastal power coal was 1166 yuan / ton, up 262 yuan / ton compared with 2021q3, and the company’s net profit increased 211% month on month compared with 2021q3 loss, reaching -13.505 billion yuan; The net profit attributable to the parent company increased by 216% month on month compared with the loss in 2021q3, reaching -11.047 billion yuan.
Vigorously transform new energy, and green power drives the improvement of the company’s performance and valuation. In 2021, the company added 2.4/0.8gw of wind power / photovoltaic installed capacity. By the end of 2021, the company had 118.7gw of installed capacity, including 10.5gmw of wind power and 3.3gw of photovoltaic power. The proportion of wind power PV revenue also increased from 1.5% in 2016 to 5.9% in 2021; The contribution of net profit increased from about 2.13 billion yuan in 2019 to about 5.1 billion yuan in 2021. It is estimated that the new energy installed capacity will be 40gw during the 14th Five Year Plan period, and the new energy installed capacity will reach 50gw by the end of 2025. With the increase of new energy installation and the promotion of green power trading and carbon trading, the company’s profit structure will continue to be optimized.
Controlling the coal price within a reasonable range, thermal power is expected to usher in a performance reversal. On February 24, the national development and Reform Commission issued the notice on further improving the coal market price formation mechanism. According to the price law and other relevant laws and regulations, it is now to further improve the coal market price formation mechanism and promote the medium and long-term transaction price of underground coal (5500kcal) in Qinhuangdao Port to be within a reasonable range of 570 ~ 770 yuan / ton (including tax). Guiding coal and electricity prices is mainly formed through medium and long-term transactions. When the medium and long-term transaction price of coal operates within a reasonable range, coal-fired power generation enterprises can fully transmit the change of fuel cost through market-oriented means under the current mechanism, and encourage the reasonable setting of terms linking the on grid price and the medium and long-term transaction price of coal in the medium and long-term transaction contract of power, so as to effectively realize the transmission of coal and electricity prices. The performance of thermal power enterprises is expected to turn over and the track will usher in revaluation.
Risk warning: the industry policy is not as expected; Electricity consumption declines; Coal prices rose sharply.
Investment suggestion: lower the profit forecast and maintain the “buy” rating.
As coal prices remained high, some profit forecasts were lowered. We estimate that from 2022 to 2024, the operating revenue of the company will be 236.6 billion yuan, 245.1 billion yuan and 252.9 billion yuan respectively (the original value in 2022 and 2023 is 225.6 billion yuan and 234.8 billion yuan), with a year-on-year increase of 16%, 4% and 3%; The net profit attributable to the parent company was 8.63 billion yuan, 12.94 billion yuan and 16.59 billion yuan respectively (the original value in 2022 and 2023 was 10 billion yuan and 14.54 billion yuan), with a year-on-year increase of 50% and 28% from 2023 to 2024; EPS is 0.55, 0.82 and 1.06 yuan, and the corresponding PE of the current stock price is 11.6, 7.7 and 6.0x. Give the company 16-17 times PE in 2022, corresponding to the reasonable value of 8.80-9.35 yuan / share, with a premium of 24% ~ 32% compared with the current share price, and maintain the “buy” rating.
