Wenshan Power (600995) First Coverage Report: The Only Listing Platform Affiliated to South Grid

Wenshan Power (600995) First Coverage Report: The Only Listing Platform Affiliated to South Grid

This report reads: The company is the only listing platform of China Southern Power Grid, and China Southern Power Grid’s own high-quality assets are decomposed.

Investment highlights: Investment 都市夜网 advice: Target price 8.

85 yuan for the first time to give “overweight.”

The EPS for 2019-2021 is predicted to be 0.

59, 0.

61, 0.

64 yuan, giving the industry an average of 15 times PE in 2019, with a target price of 8.

85 yuan, for the first time, give “overweight” rating.

Different understanding: The market believes that the company’s profitability is poor. We believe that the company, as China Southern Power Grid, is the only listed company on the platform. Because China Southern Power Grid’s asset securitization rate is compensated and it has high-quality asset substitution, the company may help to benefit fromAccelerate the reform of state-owned enterprises and the reform of the power system.

The integration of distribution and placement into one, poor profitability of the power business.

The company is mainly engaged in hydropower generation and power supply business. It is responsible for the power supply of five cities and counties in Wenshan, Laoshan, Qiubei, Funing, and Xichou in Wenshan Prefecture of Yunnan Province. It is an electric power enterprise integrating distribution and distribution.

The sales of electricity include self-generated electricity (the installed capacity of its own small hydropower is about 110,000 kilowatts) and purchased electricity, of which the purchased electricity accounted for a relatively high proportion (approximately 89% of the purchased electricity in 2018). Due to the higher cost of purchased electricity, the companyPower business is not profitable.
Benefit from high gross margin self-generating power growth in 2018 (ten-year growth).

86%), the company’s performance has improved significantly, and net profit attributable to mothers in 20183.

0 ppm, an increase of 89 in ten years.


Actively participate in the incremental power distribution business to create new growth points.

The company actively participates in the incremental power distribution business, invests in the establishment of a wholly-owned distribution electronics company, Yunnan Wendian Energy Investment Co., Ltd., and the main army of Wendian Investment is the incremental distribution and sales of electricity and comprehensive energy services. In 2018, Wendian Investment actively explored competitiveness.Power sales market, promote the integration of market-based power sales business, and complete agency transaction costs3.

With 7.8 billion kWh, the business achieved substantial progress.

In addition, the company also shares in Shenzhen Qianhai Shekou Free Trade Zone Power Supply Co., Ltd. In the future, the incremental distribution of electricity is expected to become the company’s new profit growth point.

Risk reminder: Power demand is less than expected, and the state power reform is less than expected