\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 674 Sichuan Chuantou Energy Co.Ltd(600674) )
Event:
Sichuan Chuantou Energy Co.Ltd(600674) release 2021 annual report and 2022 quarterly report:
1) in 2021, the operating revenue reached 1.263 billion yuan, with a year-on-year increase of 22.52%; The net profit attributable to the parent company was 3.087 billion yuan, a year-on-year decrease of 2.35%.
2) 2022q1: the revenue reached 174 million yuan, with a year-on-year increase of 18.18%; The net profit attributable to the parent company was 558 million yuan, a year-on-year decrease of 13.69%.
Key investment points:
For the leakage control of Renzonghai dam, the net profit in 2021 was – 2.35% year-on-year, and the net profit in 2022q1 was – 13.69% year-on-year. In 2021, the company achieved a net profit of 3.087 billion yuan, a year-on-year decrease of 74 million yuan; In Q1 2022, the company realized a net profit of 558 million yuan, a year-on-year decrease of 13.69%. The leakage treatment of Renzonghai dam led to a year-on-year decrease of 50 million yuan in the net profit of Tianwan River in 2021. At the same time, the reservoir of Renzonghai dam did not store water at the end of 2021. The power generation in Q1 2022 decreased by 26.86% year-on-year, and the superimposed financial expenses increased by 30 million yuan year-on-year, which jointly dragged down the profit.
Equity investment has brought huge profits, with a dividend rate of nearly 4%, demonstrating the company’s confidence in development. The company’s long-term equity investment project Yalong River Hydropower had a net profit of 6.317 billion yuan in 2021, a year-on-year increase of + 1.29%; The net profit of Guoneng Dadu River in 2021 was 2.174 billion yuan, a year-on-year increase of + 10.79%. The investment project brings huge profits and cash dividends to shareholders. According to the 2021 annual report, the company plans to pay a cash dividend of 4 yuan for every 10 shares, with a cash dividend ratio of 57.09%, which is further higher than the dividend ratio of 52.91% in 2020. At present, the dividend yield of the company has reached 3.7%, demonstrating the company’s confidence in development.
The 3 million KW Lianghekou Hydropower Station has been put into full operation, and Yazhong’s installed capacity has been released one after another, and its profitability is expected to rise to a higher level. By the end of 2021, 18.7 million kilowatts of hydropower had been put into operation on the Yalong River; In March 2022, the last unit of Lianghekou Hydropower Station on Yalong River was officially put into operation, with an installed capacity of 3 million KW and an average annual power generation of 11 billion kwh for many years. In addition, the 3.42 million KW projects of Kara and mengdigou hydropower stations are advancing in an orderly manner. After being put into operation, the installed capacity of the company will reach 19.32 million KW, which is expected to further improve the company’s power generation and reservoir regulation capacity and increase the company’s profits.
In the short term of profit forecast and investment rating, the power generation in 2022q1 is lower than expected, and will rise month on month in the second quarter; In the medium and long term, Yazhong’s installed capacity will be released one after another, which will effectively increase the company’s power generation, and the profit is expected to be released continuously. We estimate that the operating revenue of the company from 2022 to 2024 will be RMB 1.181/1.273/1.285 billion respectively, with a year-on-year growth rate of – 7% / 8% / 1%, the net profit attributable to the parent company will be RMB 3.457/37.06/3.757 billion respectively, with a year-on-year growth rate of 12% / 7% / 1%, and the PE from 2022 to 2024 will be 13.94/13.01/12.83 respectively. It is covered for the first time and rated as “buy”.
Risks suggest macroeconomic downturn; Risk of policy change; The incoming water is lower than expected; Capacity expansion is less than expected; Risk of electricity price decline.
