\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 900 China Yangtze Power Co.Ltd(600900) )
Event:
China Yangtze Power Co.Ltd(600900) released 2021 annual report and 2022 quarterly report:
1) in 2021, the operating revenue reached 55.646 billion yuan, a year-on-year decrease of 3.70%; The net profit attributable to the parent company was 26.273 billion yuan, a year-on-year decrease of 0.09%.
2) Q1 in 2022: the operating revenue reached 9.738 billion yuan, a year-on-year increase of 9.78%; The net profit attributable to the parent company was 3.137 billion yuan, a year-on-year increase of 9.34%.
Key investment points:
The performance was stable in 2021, and the relatively abundant water in Q1 in 2022 led to the stable growth of revenue. In 2021, the total operating revenue declined slightly, mainly due to the year-on-year dry water from the Yangtze River and the water storage of new power stations in the upstream. The total annual power generation of the company’s four cascade power stations was 208322 billion kwh, a year-on-year decrease of 8.2%. However, the increase in the performance of the company’s investment business, international business and entrusted operation and maintenance business of power stations made up for the performance impact of the decrease in power sales, and the annual profit was stable. In the first quarter of 2022, there was abundant water, and the company’s total power generation was about 34.044 billion kwh, an increase of 7.95% year-on-year, driving the stable growth of revenue.
The asset injection of Wudongde and Baihetan Hydropower Stations was started, and the installed capacity will increase by 57.46% after the transaction is completed. Recently, the company preliminarily determined to purchase 100% equity of Yunchuan company jointly held by Three Gorges group, Three Gorges investment, Yunneng investment and chuanneng investment by issuing shares, convertible bonds and paying cash. Yunchuan company is the investment and operation entity of Wudongde and Baihetan Hydropower Stations. The approved installed capacity of Wudongde Hydropower Station is 10.2 million KW and has been fully put into operation; The approved installed capacity of Baihetan Hydropower Station is 16 million KW, of which 6 units have been successfully connected for power generation. After the completion of asset injection, the company has six giant cascade hydropower stations in the main stream of the Yangtze River, and the holding installed capacity will increase to 71.795 million KW, an increase of 57.46%, and the power generation is expected to be further improved.
The scale of long-term investment continued to expand, and the investment income thickened the company’s profit. As of the first quarter report of 2022, the book value of the company’s long-term investment has exceeded 64 billion, and the proportion of long-term investment in the total assets has reached 19.7%. Among them, the increase in holdings of SDIC and Sichuan investment and the acquisition of equity of Jinzhong company in 2019 significantly increased the book value of the company’s long-term investment. The scale of long-term investment continued to expand and significantly thickened the investment income. In 2021, the investment income reached 5.426 billion yuan, a year-on-year increase of 33.9%, accounting for 16.7% of the pre tax profit. So far, the proportion of investment income in the pre tax profit has exceeded 10% for four consecutive years.
Based on the principle of prudence, the profit forecast and investment rating do not consider the impact of the acquisition of Yunchuan company on the company’s performance. It is estimated that the company’s operating revenue will be 59.2716092161.879 billion yuan from 2022 to 2024, with a year-on-year growth rate of 7% / 3% / 2%, the net profit attributable to the parent company will be 26.9202728627.521 billion yuan, with a year-on-year growth rate of 2% / 1% / 1%, and the PE will be 19.19/18.94/18.77 from 2022 to 2024, maintaining the “overweight” rating.
Risks suggest macroeconomic downturn; Risk of policy change; The water is not as expected; Electricity demand is less than expected; Electricity price decline risk; The uncertain impact of the process of purchasing 100% equity of Yunchuan company.
