Yangtze Power (600,900) in-depth report: The scarcity of hydropower faucets has both value and growth

Yangtze Power (600,900) in-depth report: The scarcity of hydropower faucets has both value and growth
Company profile: The scarce hydropower faucet has both value and growth.The company’s main military hydropower business. Until the end of 2018, the company operated and managed the Three Gorges, Gezhouba, Xiluodu, and Xiangjiaba 4 giant hydropower stations with a total installed capacity of 4,549.50,000 kilowatts, the scale far exceeds other listed companies in the same industry. Since the company’s listing, the increase in revenue and net profit attributable to the company has kept pace with the growth in installed capacity, and at the same time, it has fluctuated slightly around the performance center under the influence of water from the Yangtze River.In fact, the company’s profitability is also stable at a relatively high level.The stable profitability is superimposed on a high proportion of dividends, and the company’s dividend yield is basically stable at 3.5-4.5%, with both value and growth. Value: Four factors create conditions for stable performance & high dividends.(1) Revenue side: power delivery areas (Guangdong, Zhejiang, Shanghai), developed areas along the southeast coast, power transmission capacity transfer and hydropower itself as a clean energy have the priority to consume, so the company basically does not have downstream consumptionRestricting the amount of electricity generated creates a problem of abandoned water.In addition, the company’s four-bank joint adjustment can effectively smooth out fluctuations in incoming water and increase scale. The latest document of the National Development and Reform Commission regulates the coal-fired benchmark electricity price pushback mechanism for landing cities in the outbound hydropower stations.Because the benchmark price is consistent with the existing benchmark electricity price, the pushback price at the end of landing will also remain stable, which accurately eliminates the worry of how the previous state-of-the-art congress will reconnect to the subsequent pushback price of hydropower at the end of landing.In addition, the company’s current market-based trading power accounts for only 11% of the company’s total power sales, and the company’s average electricity price is not sensitive to the market-based discount rate; (2) Cost: The company’s average unit investment cost for power generation is zero.930,000 yuan / kilowatt, some obvious advantages, the corresponding unit depreciation expenses can also be reduced.In addition, companies with good credit ratings have significant advantages in financing costs and less pressure on debt service; (3) Investment income: The company can smooth out changes in main performance by disposing of long-term equity investments.In addition, the company’s equity participation in listed hydropower listed companies gradually established equity sharing mechanisms and strategic synergies through equity ties; (4) “Group injection” model: Minimizing the impact of capital expenditures during the construction period on the company’s free cash flowThis guarantees that the abundant cash flow formed after the water injection can be immediately converted into still principal and interest payments, and the company has a strong ability to return to shareholders while it continues to grow in stages.Steady performance increases dividends with a high percentage, and the company’s dividend yield is expected to stabilize at 3 in the long run.5% -4.Within the 5% range, it is very attractive. Growth: Uzbekistan’s installed capacity has increased 四川耍耍网 to another level, and overseas exchange business has further opened up and grown.Since its establishment, the performance of Yangtze Power has achieved two leaps and bounds, the core driving force is the growth of installed capacity.The first units of Wudongde Hydropower Station (10.2 million kilowatts) and Baihetan Hydropower Station (16 million kilowatts) currently under construction by the Three Gorges Group will be put into operation in 2020 and 2021.According to the Three Gorges Group’s commitment to avoid peer competition, the two giant generators will be injected into listed companies after completion, and the company’s installed installed capacity will increase significantly.6% to 7169.50 kilowatts, and the power generation is expected to increase by 47.04% to 3168.3.5 billion kWh, and gradually realize a new round of leaping growth.In addition, under the background that the growth space of the hydropower industry is gradually narrowing, the company actively extends the industrial chain downwards and enters the power distribution business.On September 30, 2019, the Japanese company issued an announcement saying that it planned to bid for the purchase of exchange assets. This investment has enabled the company to achieve a water, electricity extension and international development strategy, and gradually formed a coordinated integration of the development, distribution, and electricity sales industry chainThe advantage lies in solving the foundation, and also further opening up the company’s future growth space. Investment strategy: The company is one of the few targets in the stock market that has both value and growth.In terms of stock, a solid performance is superimposed on a high proportion of dividends, and the company’s dividend yield is expected to remain at 3 in the future.5% -4.In the 5% range, the value has become increasingly prominent in the context of the decline in domestic interest rates.In terms of increments, the construction work of Wudongde and Baihetan Power Plants is progressing in an orderly manner. In the future, the company’s installed capacity and performance are expected to increase again. The acquisition of overseas assets will also increase the company’s growth attributes. We estimate that the net profit attributable to shareholders of the parent company in 2019/20/21 will be 229, respectively.44/231. 18/231.24 ppm, equivalent to 1, respectively.04/1.05/1.05 yuan / share, currently 17.RMB 76, corresponding to PE of 17.0X / 16.9X / 16.9X, maintaining the company’s “overweight” rating. Risk reminders: the risk of fluctuations in water flow from the river basin; the progress of related engineering construction is less than expected;