\u3000\u30 Shenzhen Capstone Industrial Co.Ltd(000038) 16 Cgn Power Co.Ltd(003816) )
Event overview: the company released the first quarter report of 2022, and achieved an operating revenue of 17.178 billion yuan during the reporting period, with a year-on-year increase of 0.2%; The net profit attributable to shareholders of listed companies was 2.852 billion yuan, a year-on-year increase of 20.1%; Non net profit attributable to shareholders of listed companies was RMB 2.815 billion, with a year-on-year increase of 20.5%.
Hongyanhe performed well, and the defects of units in Guangdong Province were not hidden: 1q22, the power generation capacity of nuclear power units operated and managed by the company was 49.059 billion kwh, a year-on-year increase of 1.25%; The on grid power was 46.202 billion kwh, a year-on-year increase of 1.31%. Among them, the power generation of Hongyan river was 10.333 billion kwh, a year-on-year increase of 26.1%. From January to February 2022, the power consumption of Guangdong Province increased by 3.0% year-on-year, lower than the national average of 1.8pct, and the power demand fell significantly; Affected by the shutdown and maintenance of Taishan unit 1, the power generation of Taishan nuclear power decreased by 44.3% year-on-year. However, the total power generation and total on grid power of the company’s units in the province decreased by only 2.3% and 2.0% year-on-year respectively.
The decrease of cost and the increase of investment income promote the high increase of profit: in 1q22, the company’s electricity price level is improved, and the revenue of the main power generation industry is expected to increase. The main reason why the total revenue is basically the same as that in 1q21 or the scale of engineering construction with high cost and low gross profit is reduced, so the operating cost is reduced by 546 million yuan year-on-year. Meanwhile, benefiting from the brilliant performance of Hongyanhe, the investment income in a single quarter increased by 147 million yuan year-on-year. Dual factors promoted the company’s operating profit to increase by 810 million yuan year-on-year, with a growth rate of 18.5%, exceeding the growth rate of operating revenue by 18.3pct.
Steady progress was made in the projects under construction, and the national Standing Committee approved Lufeng phase III: on April 20, Premier Li Keqiang chaired an executive meeting of the State Council to approve six nuclear power units including Lufeng phase III. Among them, Lufeng phase III, which is controlled by the company, will use domestic third-generation nuclear power hpr1000 (Hualong 1) technology, and Guodian Haiyang phase II and China Nuclear Sanmen phase II will use cap1000 (domestic version of Westinghouse third-generation nuclear power technology AP1000). The national standing committee will release AP1000, and the subsequent approval of Lufeng phase I and phase II adopting AP1000 technology will rekindle hope, which can avoid the waste of funds invested in preliminary preparation. By the end of 2021, Lufeng project had invested 20.433 billion yuan, and the hidden worries about the impairment loss of Tianliang assets could be eliminated. In addition, Hualong 1 projects such as Ningde phase III and Fangchenggang phase III, which are controlled by the company, have been submitted for approval, and the reserve and development of subsequent plant sites are expected to continue to advance.
Investment suggestion: the trading price of Q1 market has increased, but the growth rate of power consumption in Guangdong Province has slowed down and Taishan No. 1 unit has been shut down for maintenance. As a result, the company’s revenue is basically the same as that of the same period last year; Benefiting from the reduction of cost and the improvement of investment income, the profit achieved higher growth. With the release of the AP1000 project, Lufeng phase I of the company is also expected to come back from the dead, and the hidden worries about the asset impairment loss invested in the early stage can be eliminated. Maintain the profit forecast of the company. It is estimated that the EPS of the company in 22 / 23 / 24 years will be 0.20/0.23/0.23 yuan respectively, corresponding to the closing price of PE on April 21, which is 13.5/12.2/11.8 times respectively. Give PE 15 times in 22 years and the target price of 3.00 yuan / share, and maintain the rating of “prudent recommendation” of the company.
Risk warning: 1) nuclear safety accident; 2) Policy changes; 3) New technology is blocked; 4) Electricity price adjustment; 5) Exchange losses.
