\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 900 China Yangtze Power Co.Ltd(600900) )
Event: in 2021, the company achieved an operating revenue of 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%; The net profit deducted from non parent company was 24.141 billion yuan, a year-on-year decrease of 7.77%. In the first quarter of 2022, the company achieved an operating revenue of 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%; The net profit deducted from non parent company was 3.097 billion yuan, with a year-on-year increase of 29.91%.
Comments:
Affected by the incoming water in 2021, the company’s performance declined slightly and gradually improved in 2022q1. Affected by the year-on-year decline of incoming water and the water storage of new power stations in the upstream, the power generation capacity of the four cascade hydropower stations in the river basin of the company was 208322 billion kwh, a decrease of 8.2% over the same period of last year. However, with the improvement of water inflow in the first quarter of 2022, the cumulative power generation of 2022q14 power stations was 34 billion kwh, an additional 2.5 billion kwh compared with the same period last year, and the total profit and net profit increased.
Wudongde and Baihetan Hydropower Stations have been put into operation successively, and the asset injection can be expected in the future. In June 2021, 12850000 kW units of Wudongde Hydropower Station were put into operation for power generation; The first batch of units of Baihetan Hydropower Station have been put into operation on June 28, 2021. The company expects to achieve the goal of putting all 16 1 million KW units into operation in July 2022. In July 2021, with the power dispatching authority of Baihetan Hydropower Station officially transferred to China Yangtze Power Co.Ltd(600900) , the company completed the “six reservoir joint commissioning” from the lower reaches of Jinsha River to the middle and upper reaches of the Yangtze River. At the same time, the company issued the suspension notice on planning major asset restructuring in November 2021, announcing that the controlling shareholder Three Gorges group is planning to inject the above two hydropower assets into the company. After the asset injection is completed in the future, the company’s hydropower installed capacity in China will increase from the current 45.495 million kW to 71.695 million KW, an increase of 57.59%, and the power generation will be further improved.
Steadily promote the development of new energy business. The company has actively arranged the integrated development of “source, network, load and storage”, signed smart comprehensive energy strategic cooperation agreements in many cities and regions such as Changsha, Hunan, and has arranged a number of projects such as Cecep Solar Energy Co.Ltd(000591) storage and biological natural gas. In April 2021, the company established Changdian new energy Co., Ltd., whose business scope includes Cecep Solar Energy Co.Ltd(000591) power generation, wind power generation and energy storage in addition to hydropower; In November 2021, Changdian Xinneng and the wholly-owned subsidiary Yunnan Energy Investment Co.Ltd(002053) of the controlling shareholder of the company jointly funded the establishment of Changdian Yunneng, which will serve as the implementation platform of Yunnan side of the scenery integrated renewable energy base in the lower reaches of Jinsha River; In March 2022, the first phase of 150MW distributed photovoltaic and 1GWh energy storage smart integrated energy project invested by the company’s joint venture subsidiary Three Gorges electric energy started. After completion, it will be the largest user side light storage smart integrated energy project in Central China. The layout of new energy and energy storage will bring new profit growth points to the company.
Investment income is expected to further increase the company’s income in the future. In 2021, the company realized an investment income of 5.426 billion yuan, a year-on-year increase of 33.88%, a record high. At the same time, the net cash flow from the company’s investment activities increased by 29.472 billion yuan year-on-year, mainly due to the acquisition of Peru Luther project in 2020. By the end of 2021, the company’s long-term equity investment had reached 60.717 billion yuan, accounting for 18.48% of total assets, an increase of 3.25 percentage points over the same period last year. In the future, with the further increase of the company’s long-term investment proportion, the proportion of investment income will continue to increase, which will bring double growth of performance and cash flow to the company.
Maintain the “buy” rating: as the world’s largest listed hydropower company, the company’s profit decline in 2021 is mainly due to the impact of weak incoming water, which has improved in 2022q1. With the successive operation of Wudongde and Baihetan Hydropower Stations, the asset injection will increase the installed capacity proportion of the company by 57.59%, and the power generation and revenue will also increase significantly. At the same time, the company actively expands and distributes the field of new energy, and long-term equity investment will also bring new profit growth points to the company. Based on the principle of prudence, the impact of injection of wubai hydropower station will not be considered temporarily; At the same time, considering the impact of changes in water inflow, we adjusted the company’s revenue and performance. It is estimated that the company’s operating revenue from 2022 to 2024 will be 62.050 billion yuan, 62.762 billion yuan and 63.419 billion yuan respectively (58.046 billion yuan and 58.655 billion yuan respectively in 2022 and 2023 before adjustment), with a year-on-year increase of 11.51%, 1.15% and 1.05% respectively; The net profit attributable to the parent company was 30.529 billion yuan, 31.761 billion yuan and 32.392 billion yuan respectively (before adjustment, it was 27.287 billion yuan and 27.899 billion yuan in 2022 and 2023 respectively), with a year-on-year increase of 16.20%, 4.04% and 1.98% respectively. The corresponding EPS is 1.34, 1.40 and 1.42 yuan respectively, and the corresponding PE is 16.92, 16.27 and 15.95 times respectively.
Risk warning: water inflow is easily affected by seasons; The asset injection of wubai hydropower station is less than expected; The development of new energy business is less than expected; Intensified market competition; The return on investment was less than expected.
