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Changyuan Power (000966): Improved regional supply and demand + Menghua push coal prices down and performance is significantly more flexible

Changyuan Power (000966): Improved regional supply and demand + Menghua push coal prices down and performance is significantly more flexible
Key points of investment: The regional thermal power platform to which National Energy Group belongs, the current performance is at historical lows.The company is a subsidiary of National Energy Group (holding 37 shares.39%) Listed thermal power companies in Hubei Province, currently have 3.59 million kilowatts of installed coal power, all of which are located in Hubei Province.The company’s historical profitability is strong, with ROE exceeding 30% in 2014 and 2015.Since the reform of the coal supply side, central China has become a focus of de-capacity due to poor coal quality, and coal has gradually concentrated in the “three western” regions. Due to the lack of direct railways, the rise in thermal coal prices in central China has greatly exceeded the national average, and the company’s profitabilityRapid decline, net profit attributable to mothers increased by 1 in 2017.2.2 billion.Benefiting from the significant increase in utilization hours in 2018 and the increase in on-grid electricity prices, the company’s 2018 performance forecast is expected to reach zero net parental profit1.89 to 2.2.5 billion, turning losses into profits. The Mongolia-China Railway is about to start production, and is expected to completely reshape the coal supply and demand pattern in central China.The Mongolia-China Railway is the largest coal transport line under construction in developing countries, connecting Shaanxi-Mongolia coal production areas and central China’s coal provinces. It is expected to start production in October 19th.The initial capacity of the Menghua Railway is 6,000 tons per year. Combined with the construction progress of the dredging project, it is estimated that the capacity will reach 50% in Hubei.At present, the railway and the “Haijinjiang” account for about 50% of the coal transportation methods in Hubei Province. We judge that the Menghua Railway will mainly replace the “Haijinjiang” method at the initial stage of operation. According to the calculation, 50% of capacity will be used in Hubei, and 60%Haijinjiang Coal.At present, the freight from Shaanxi-Mongolia coal via the “Haijin River” to Hubei 厦门夜网 is more than 300 yuan, and the transportation cost can be reduced by 60-80 yuan / ton through the Menghua Railway. The company is the most decisive beneficiary of Menghua Railway.The company’s subsidiary unit is connected to the Menghua Railway, of which Jingmen Power Generation, Jingzhou Thermal Power is located along the Menghua Railway, Changyuan Yifa is located in Wuhan, Hanchuan Yifa is located in Hanchuan, and it crosses the Han River. The Jingzhou Iron and Water Combined Transport Base or ChangzhouThe Thorns and Handan line is connected to the Menghua Railway, which is expected to take the lead in enjoying the advantage of the Menghua Railway freight rate.The company and Shenhua Group are also affiliated with the National Energy Group, and the company is expected to gain an advantage in the initial supply allocation.武汉夜网论坛 Regional power demand has maintained a high growth rate, and Hubei’s thermal power utilization hours have helped maintain the high level.We judge that the growth rate of power consumption in various provinces will continue to differentiate in 2019. Hubei Province will use the advantages of economic development to maintain a high growth rate of power demand. Even in the next two years, Hubei Province will focus on the production of about 4 million kilowatts of thermal power units.Higher utilization hours.In 2019Q1, there was less rainfall in Hubei Province, and the superimposed power consumption increased rapidly. The province ‘s gradual utilization of thermal power from January to February exceeded 102 hours.We estimate that if Hubei Province does not experience a major rebound in water in the calendar year 2019, the province’s thermal power utilization hours are expected to continue to increase. Entrusted management group with 2.7 million kilowatts of thermal power assets has room for expansion.The company is a listed platform for thermal power of Hubei Province of the National Energy Group. In addition to the power plants under the jurisdiction of the company, the group also owns Hanchuan Power Plant (2 * 1 million kilowatts) in Hubei area, and Guodian Qingshan Thermal Power (2 * 350,000 kilowatts) totals 2.7 million kilowatts.Thermal power assets.The above-mentioned unit and the company’s related power assets have the same industry competition. At present, the company is entrusted to manage the company. The company will actively create conditions for the integration of the above assets.As the power supply and demand in the province improves, the Menghua Railway opens to traffic, and the profit of the trusteeship unit continues to increase, which may provide positive conditions for the company’s asset integration. Profit forecast: We expect the company’s net profit attributable to its mothers to be 1 in 2018-2020.97, 6.01, 8.12 trillion, the corresponding EPS is 0.18, 0.54, 0.73 yuan / share.The current expected corresponding PE is 28 times, 9 times and 7 times, which obviously exceeds comparable companies.With the improvement of the power supply and demand pattern, the expected decline in coal prices, and the expansion of the triple benefits, we judge that the overall allocation of the thermal power sector will usher in a time.From the perspectives of power supply and demand scale, power plant geographic location, and the decline in coal price, we believe that Changyuan Power has a certainty for the commissioning of the Menghua Railway. Risk warning: Mongolia-Huawei Railway’s initial capacity is less than expected, Hubei Province ‘s water supply has improved significantly, and Hubei ‘s power demand is less than expected