HEGC(SZ:000883) Guoxin Securities·2024-08-28 12:12Investment Rating - The investment rating for Hubei Energy (000883.SZ) is "Outperform the Market" [4][20]. Core Views - The company's operating revenue increased to 9.821 billion yuan (+8.05%) in H1 2024, with a significant improvement in net profit attributable to shareholders, reaching 1.426 billion yuan (+58.14%) [1][5]. - The growth in revenue is attributed to higher water levels and improved water inflow for hydropower, increased installed capacity for thermal power, and growth in renewable energy generation [1][5]. - The profitability of coal power is stabilizing, with ongoing projects expected to enhance capacity and profit margins in the future [1][16]. - The company is actively expanding its renewable energy and pumped storage projects, which are anticipated to contribute to further profit growth [1][16]. Summary by Sections Financial Performance - In H1 2024, the company achieved an operating revenue of 9.821 billion yuan, with a net profit of 1.426 billion yuan, reflecting a substantial year-on-year increase [1][5]. - The second quarter saw a revenue of 4.615 billion yuan (-7.63%) and a net profit of 646 million yuan (+9.33%) [5]. - The increase in net profit is primarily due to improved hydropower generation and reduced fuel costs for thermal power [1][5]. Revenue Breakdown - Hydropower revenue increased by 1.003 billion yuan, thermal power revenue rose by 677 million yuan, and renewable energy revenue grew by 95 million yuan [1][5]. - The company has reduced external coal procurement, focusing on internal sourcing, which has impacted coal trading revenue negatively [5]. Future Outlook - The company expects stable electricity and coal prices, which will help maintain reasonable profit levels in the coal power segment [1][16]. - Ongoing projects, including the Jiangling Phase II thermal power expansion with a capacity of 1.32 million kilowatts, are expected to enhance the company's coal power capacity and profitability [1][16]. - The company added 655,500 kilowatts of controllable power generation capacity in H1 2024, with a total capacity of 16.3273 million kilowatts as of June 2024 [1][16]. Valuation - The estimated net profit for 2024-2026 is projected to be 2.569 billion yuan, 2.926 billion yuan, and 3.322 billion yuan, respectively, with corresponding EPS of 0.39, 0.45, and 0.51 yuan [2][16]. - The current stock price corresponds to a PE ratio of 12.5 for 2024, with a target price range of 5.12 to 5.52 yuan per share, indicating a premium of 4% to 12% over the current price [2][16].