SDIC Power (600886) 2019 First Quarterly Report Review: Results Meet Expected Changes in Electricity Prices

SDIC Power (600886) 2019 First Quarterly Report Review: Results Meet Expected Changes in Electricity Prices

Operating income for the first quarter of 2019 increased by 7.

64%, net profit attributable to mothers increased by 6.

14% of the company’s 2019Q1 operating income +7.

64% to 101.

1.5 billion, net profit attributable to mother +6.

14% to 10.

5 billion yuan, performance in line with expectations.

The growth of water supply and the new installed capacity of thermal power drive the growth of power generation12.

74%, electricity price 上海夜网论坛 profit 7.

03% of the company’s 2019Q1 total power generation +12.

74% to 378.

6.6 billion kilowatt-hours; of which hydropower generation +9.

39% to 198.

7.4 billion kilowatt-hours, mainly because the Yalong River has better incoming hydropower, with a power generation capacity of +7.

40% to 172.

09 billion kilowatt hours.

Thermal power generation +15.

72% or 23.

3.6 billion kWh to 171.

9.7 billion kWh was mainly put into operation in June 18 of the second phase of Beijiang, and the northern Xinjiang company issued 17 in 19Q1.

3.3 billion kilowatt-hours; Gansu’s outbound electricity supply increased, and Jingyuan No. 2 Power Plant added 7.

1.4 billion kilowatt hours.

The company’s average on-grid tariff including tax is -7.

03% to 0.

308 yuan / kWh; of which hydropower-12.

50% to 0.

254 yuan / kWh, mainly the Yalong River electricity price -14.

14% to 0.

258 yuan / kWh; thermal power price -4.

05% to 0.

360 yuan / kWh.

With the expected interest rate reduction of 3 pct since 19Q2, we expect that the electricity price index will improve the comprehensive gross margin and yield slightly earlier in 19Q1. ROE will decline slightly.

45 pct to 39.

91%, rated ROE drops to 0.

58 pct to 2.

61%.

We judge that the slight decline in comprehensive gross profit margin is the hedging result of lower electricity prices and lower coal costs.

Company investment income +35.30% to 1.

100,000 yuan, mainly due to the increase in profits of participating companies; other income -83.

53% to 0.

1.8 billion, mainly because the Yalong River and Dachaoshan tax refund policy expired.

The asset-liability ratio was steadily declining, driving the financial expense ratio downward, the cash flow continued to increase by 19Q1, and the company’s asset-liability ratio was downgraded by 3.

07 pct to 67.

28%; financial expenses -1.

57% to 11.

84 ppm; decrease in financial expense ratio by 1.

09 pct to 11.

71%; during the period, the expense ratio drops to 0.

62% to 14.

81%; net operating cash flow +0.

55% to +41.

9.5 billion.

Investment suggestion: highlight the value of allocation and maintain the “overweight” rating. We maintain our forecast for the company’s revenue in 2019-2021 to be 419.

26/420.

92/435.

6.7 billion, net profit attributable to mother 46.

71/49.

31/52.

5.7 billion, corresponding to a dynamic PE of 11.

7x / 11.

1x / 10.

4 times.

The hydropower business provides defensiveness, and expects the subsequent investment in the construction of Yazhong Units; the thermal power business’s flexibility in the downward cycle of coal prices; maintaining the “overweight” level, a reasonable estimate10.

90-11.

01 yuan.

Risk Warning: Saturation of incoming water, increase of electricity price, decrease of electricity demand