Guiguan Power (600236) 2018 Annual Report and 2019 First Quarterly Report Comments: The level of weak performance and slightly reduced dividends are still considerable

Guiguan Power (600236) 2018 Annual Report and 2019 First Quarterly Report Comments: The level of weak performance and slightly reduced dividends are still considerable

2018 performance -3.

38%, 2019Q1 performance -2.

32% restate the impact of the acquisition of Jujuyuan Power, the 杭州夜网 company’s 2018 revenue -1.

31% to 95.

1.4 billion, net profit attributable to mother -3.

38% to 23.

8.5 billion; 2019Q1 revenue -0.

66% to 23.

180,000 yuan, net profit attributable to mother -2.

32% to 5.

9.2 billion yuan.

The company intends to pay 0.

25 yuan / share and 10 get 3, corresponding to the latest dividend rate of 5.

65%.

In recent years, the amount of light power has fallen slightly, and the decline in hydropower prices has affected performance. In 2018, the company acquired Juyuan Power 971.

100% equity of 6MW hydropower units, but including dry water from Hongshui River16.

3%, total power generation +11.

49% to 413.

At 3.5 billion kWh, the total power generation after removing poly sources and going to school dropped slightly.

82%.

2019Q1 company’s total power generation 四川耍耍网 -0.

79% to 95.

7.2 billion kilowatt hours.

2018Y Hydropower Revenue -3.

46% to 82.

47 trillion, power generation -0.

38% to 383.

70 ppm, gross margin -2.

63 pct to 58.

32%, reflecting the decline in the price of hydropower in Guangxi, mainly due to the price cuts during the high water period, the overall adjustment of the power plant’s hydropower trading, and the impact of reducing the price of the industrial park.

Affected by mergers and acquisitions and subsequent capital expenditure plans, the upward impact on asset-liability ratio and financial expenses was affected in December 2018.

The impact of the US $ 3.3 billion merger and acquisition of Juyuan Power, the company’s 2018 asset-liability ratio +4.

62 pct to 63.

88%, financial expenses +20.

00% to 11.

830,000 yuan, financial expense ratio +1.

20 pct to 12.

44%. In 2019Q1, the company’s asset-liability ratio dropped to 62.

72%, financial expenses +30.

42% to 2.

9.1 billion.

Yangtze Power increased its shareholding and rose to 2.

57%.

In Q4 2018, Yangtze Power increased its 2% stake in the company, and in Q1 2019 it increased its holdings again.

57%, holding 2 shares at the end of 2019Q1.

57%, ranking the company’s 6th largest shareholder.

Taking into account the sufficient assets of Guiguan Power and referring to the history of Yangtze Power’s increase in holdings of other hydropower peers, we believe that Yangtze Power may continue to increase its holdings.

Investment suggestion: For the first time, the company will be given an “overweight” rating. Considering the company’s planned growth of 30.71 million yuan in 2019, we will not consider the impact of the bonus issue. We expect the company’s operating income in 2019-2021 to be 97.

30/97.

90/97.

6.6 billion, net profit attributable to mother 25.

94/26.

87/26.

8.6 billion, corresponding to a dynamic PE of 13.

3x / 12.

9x / 12.

9x, the first coverage is given an “overweight” rating, a reasonable estimate of interval 6.

84-7.

09 yuan.

Risk Warning: Downstream Water Supply, Downward Electricity Prices, Financial Costs Increase

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