SDIC Power (600886): Hydropower price restructuring in the third quarter but the subsequent price risks have been basically eliminated

Company dynamics keep outperforming industry companies SDIC Power released 3Q19 operating data: the company’s third-quarter power generation was 49.1 billion kWh, each time +3.

9%; the average on-grid price is 0.

289 yuan / degree, ten years -4.

7%.

Among them, hydropower and thermal power generation +0 respectively.

1%, +9.

1%; the average on-grid price is -8 per year.

5%, -3.

4%.

In the first three quarters, the company completed 121.7 billion kWh of electricity generation, +8 a year.

2%; average on-grid electricity price is 0.

303 yuan / degree, ten years -3.

9%.

Among them, hydropower and thermal power generation are +4 respectively.

1%, +12.

4%; the average on-grid price is -7 per year.

2%, -3.

4%.

Commenting on the Yalong River, SDIC Dachaoshan’s electricity price declined significantly in the third quarter, but the risk may be basically lifted in the fourth quarter.

In the third quarter, the electricity price of the company’s hydropower sector was replaced by 8.

5%, of which Yalong River Hydropower, SDIC Dachaoshan several times -7.

7%, -46%.

In our view, this downward adjustment may be based on 武汉桑拿 the government’s demand for profit, but the risk of downward electricity price increase in the fourth quarter may be basically eliminated.

In terms of power generation, except for SDIC Dachaoshan, which is at least nearly 40% per year in the third quarter, the company ‘s remaining hydropower generating units have generally increased steadily.

In the third quarter, the thermal power sector’s profitability or benefit will increase over hours and coal prices will fall.

The company’s thermal power generation in the third quarter increased by 9 per year.

1%.

Considering that the company’s latest Beijiang 2 phase was put into operation in June last year, we believe that the growth of the company’s thermal power generation is mainly driven by the increase in utilization hours.

The increase in the amount of power delivered and the rapid increase in power consumption have brought Gansu, Guangxi and Xinjiang units to increase by + 24%, + 68% and + 101% in the third quarter.

In addition, we expect the company’s standard coal unit price in the third quarter is expected to fall by 7%.

Estimates suggest that we temporarily maintain the company’s profit forecast unchanged.

The company is currently trading in February 2019/20.

6% / 2.

8% exponential rate, 13.

3/12.

6 times P / E ratio and 1.

5/1.

4x P / B ratio.Maintain Outperform Industry Rating and Target Price 9.

64 yuan, corresponding to 2019/20 year 2.

4% / 2.

6% exponential rate, 14.

5/13.

7x P / E ratio and 1.

6/1.

5 times P / B ratio, 8 more recently included.

9% upside.

The risk coal price was higher than expected; the reduction in financial costs was less than expected.