\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 025 Huaneng Lancang River Hydropower Inc(600025) )
Event:
Huaneng Lancang River Hydropower Inc(600025) release the 2021 annual report and the 2022 quarterly report:
1) in 2021, the operating revenue reached 20.202 billion yuan, a year-on-year increase of 4.93%; The net profit attributable to the parent company was 5.838 billion yuan, a year-on-year increase of 20.75%.
2) 2022q1: the operating revenue was 3.941 billion yuan, a year-on-year increase of 2.72%; The net profit attributable to the parent company was 742 million yuan, a year-on-year increase of 23.4%.
Key investment points:
The rise of electricity price offset the impact of electricity decline, replaced the stock debt and reduced the financial expenses. The net profit in 2021 was + 20.75% year-on-year. In 2021, the company’s comprehensive electricity price increased significantly, from 0.018 yuan / kWh to 0.241 yuan / kWh year-on-year, offsetting the adverse impact of the 3.25% decline in power generation, driving the operating revenue to increase by 4.93% year-on-year. At the same time, the company carried out cost control through the early replacement of stock debt with low interest rate funds. The financial expenses decreased by 12.70% year-on-year, driving the net profit attributable to the parent company to increase by 20.75% year-on-year and the earnings per share to increase by 18.52% year-on-year.
2022q1 power generation is repaired. With the upward movement of the settlement price center, the company is expected to increase both volume and price throughout the year. In 2022q1, the inflow of wunonglong and Xiaowan sections in Lancang River Basin was 6% and 9% higher than that of the same period last year. The superimposed power transmission from west to East increased year-on-year, driving the power generation to increase by 1.62% year-on-year. At the same time, the upward trend of electricity price transaction in Yunnan Province is determined. The average transaction price of power plants in Yunnan Province in March 2022 is 026626 yuan / kWh, up 6.35% from 025036 yuan / kwh in March 2021. Huaneng Lancang River Hydropower Inc(600025) has the largest installed capacity in Yunnan, which will fully benefit from the upward trend of electricity price.
The profit of kwh power was + 22% year-on-year, with equal emphasis on hydropower and new energy, and the fundamentals of regional leaders were stable. Benefiting from the rise of electricity price, Huaneng Lancang River Hydropower Inc(600025) kwh profit increased from 0.049 yuan / kwh in 2020 to 0.060 yuan / kwh in 2021, with a year-on-year increase of 22%, and the profit center continued to rise. In terms of new energy, the company plans to invest 5 billion yuan in 2022, plans to start 15 new projects, and plans to put into operation an installed capacity of 1.3 million KW. In addition, during the 14th Five Year Plan period, the company expects that there will still be about 9.25gw of unit depreciation due, which will release a large profit space.
Profit forecast and investment rating Huaneng Lancang River Hydropower Inc(600025) ranks first in Yunnan in terms of installed capacity, accounting for a high proportion of market-oriented trading electricity, and is expected to achieve both volume and price increases. We estimate that the operating revenue of the company from 2022 to 2024 will be 21.174225.3523723 billion yuan respectively, with a year-on-year growth rate of 5% / 6% / 5% respectively, and the net profit attributable to the parent company will be 6.975/76.738566 billion yuan respectively, with a year-on-year growth rate of 19% / 10% / 12% respectively. The PE from 2022 to 2024 will be 16.23/14.76/13.22 respectively. It will be covered for the first time and given a “buy” rating.
Risks suggest macroeconomic downturn; Risk of policy change; The incoming water is lower than expected; Electricity demand is less than expected; Risk of electricity price decline.
