According to the Securities Times APP, Tianfeng Securities released research reports stating that SASAC proposed to maintain the "one profit and five ratios" target management system for central enterprises unchanged in 2024, with specific requirements being "one profit stable growth, five ratios continuous optimization". The transition of the "baton of command" assessment guides central enterprises towards high-quality transformation. Under the 2024 "one profit and five ratios" assessment framework, State Grid Corporation and China National Nuclear Corporation have relatively high asset-liability pressure, while China Huaneng Group has the highest ROE profit level.

In terms of symbols, it is suggested to focus on China Longyuan (001289.SZ) and China Power (02380) in the green energy industry; in the environmental protection industry, it is suggested to focus on EB Environment (00257) and others; in the thermal power industry, it is suggested to focus on Inner Mongolia Mengdian Huaneng Thermal Power Corporation (600863.SH) and others; in the hydropower industry, it is suggested to focus on Huaneng Lancang River Hydropower Inc. (600025.SH) and others; in the nuclear power industry, it is suggested to focus on CGN Power (01816) and others.

Tianfeng Securities' main points are as follows:

SASAC proposed to maintain the "one profit and five ratios" target management system for central enterprises unchanged in 2024, with specific requirements being "one profit stable growth, five ratios continuous optimization". As the end of 24 approaches, we start from the "one profit and five ratios" to review the operating performance of core central enterprises in the public environmental protection industry.

Key Points: The company's performance declined due to the impact of orders from US customers. According to the company's 23-year annual report, the company achieved a revenue of 471 million yuan (YOY-1.31%); net income attributable to the parent company was 146 million yuan (YOY-20.19%), and the 23-year performance decline was mainly due to (1) The company's endoscope body shipments increased significantly, and the actual launch time of the new system for US customers was postponed compared to the original plan, affecting the company's shipment volume; (2) The company implemented stock-based incentives in 23 years, resulting in an increase in share-based payment expenses; gross margin was 63.72% (YOY-0.63pp). According to Wind, the company achieved a revenue of 118 million yuan in 24Q1 (YOY-20.74%), net income attributable to the parent company was 38 million yuan (YOY-20.68%), and the decline in performance was mainly due to the scale of lens body shipments in 23Q1, which doubled compared to previous years, and the high base period had an impact on this period's performance.

The transition of the "baton of command" assessment guides central enterprises towards high-quality transformation.

After our country's economy transitioned to the high-quality development stage, the State-owned Assets Supervision and Administration Commission of the State Council has dynamically adjusted the assessment indicators of central enterprises to proactively adapt to the new requirements of high-quality development at different stages, guiding central enterprises to gradually transform towards high-quality development. From 2019 to now, the State-owned Assets Supervision and Administration Commission of the State Council has continuously optimized the assessment indicators for the high-quality development of central enterprises from 'two benefits and one ratio' to 'two benefits and three ratios,' then to 'two benefits and four ratios,' and further to 'one benefit and five ratios.' In 2024, the State-owned Assets Supervision and Administration Commission of the State Council proposed to maintain the goal management system of 'one benefit and five ratios' while achieving 'stable growth with one benefit and continuous optimization with five ratios,' in order to further upgrade the high-quality development of central enterprises guided by value creation.

Which central enterprise faces greater pressure on asset-liability ratio? Which one has higher profit levels?

Under the assessment indicators of 'one benefit and five ratios,' we selected 11 groups including State Energy Group, State Power Investment Group, Huaneng Group, Huadian Group, and their listed companies for analysis.

I. Asset-liability ratio: At the group level, Datang Group and CNNC Group have the highest asset-liability ratios and relatively high pressure, both reaching 70% by the end of Q3 2024; during the same period, State Power Investment Group, Huaneng Group, Huadian Group, CGN Group, and CECEP Group also had relatively high asset-liability ratios, ranging from 68.0% to 70%; At the listed company level, as of the end of Q3 2024, the list of listed companies under each group with asset-liability ratios exceeding 80% includes Huadian Liaoning Power (93%), Datang Huayin Electric Power (92%), China Nuclear Engineering Corporation (83%), CECEP Techandecology&Environment (82%), China Nuclear Engineering Corporation (81%).

II. ROE: At the group level, comparing the average ROE of Q1-3 2024, Huadian Group has the highest profit level (11.7%), followed by State Energy Group (7.5%) and Huaneng Group (7.3%), while the groups with relatively lower profit levels are CECEP Group (1.6%), State Grid (2.2%), and Datang Group (2.7%); At the listed company level, GD Power Development (17%), China Yangtze Power (14%), Inner Mongolia Dian Tou Energy Corporation (14%) are the top three with the highest average ROE in Q1-3 2024; Ningxia Younglight Chemicals (-17%), CECEP Techandecology&Environment (-13%), CGN Nuclear Technology Development (-2%) are the bottom three with the lowest average ROE in Q1-3 2024.

*Note: The financial indicators of listed companies preferentially use the data from the third quarter of 2024, but for some Hong Kong-listed companies that have not disclosed their third-quarter reports, the data from the half-year report of 2024 are used.

Investment advice

The evolution of the 'baton' of assessment guides central enterprises towards high-quality transformation. Under the assessment framework of 'one benefit and five ratios' in 2024, Datang Group and CNNC Group face relatively high pressure on asset-liability ratios, while Huadian Group has the highest ROE profit level. As for the symbols, it is recommended to focus on China Longyuan and China national nuclear power in the green power industry; EB Environment, Grandblue Environment, and BJ Ent Water in the environmental protection industry; Inner Mongolia Mengdian Huaneng Thermal Power Corporation, Zhejiang Zheneng Electric Power, GD Power DevelopmentH, Huadian Power International Corporation, Huaneng Power International, Inc. in the thermal power industry; Huaneng Lancang River Hydropower Inc., Sichuan Chuantou Energy, China Yangtze Power, SDIC Power Holdings in the hydropower industry; CGN Power Co.,Ltd. H, China National Nuclear Power, and CGN Power in the nuclear power industry.

Risk Warning: Risks of policy changes, significant macroeconomic fluctuations, substantial coal price fluctuations, lower-than-expected electricity demand, significant fluctuations in water inflow, lower-than-expected power generation, risks of electricity price fluctuations, and more.