January 2023 wind power generation increased by 31.5% compared with the same period last year
The company publishes ideal operating data for January 2023. Wind power generation rose 31.5% year-on-year to 1513 gigawatt hours, equivalent to the 10.0% we forecast for the whole year. We attribute it to (1) good wind resources and (2) a low base last year.
Natural gas sales fell 1.5 per cent year-on-year to 686m cubic metres, with wholesale and retail sales (excluding CNG/LNG) down 1.0 per cent and 2.6 per cent respectively. We believe that the demand for industrial gas is mainly affected by the Spring Festival. The Spring Festival holiday in the mainland this year is from January 21 to 27, compared with February last year (Note: January 31 to February 6).
The operation was stable last year and is expected to speed up this year.
The company's operating performance was stable in 2022. Even if affected by the epidemic, wind power generation and natural gas sales can still rise 4.2 per cent and 2.0 per cent year-on-year to 14031 gigawatt hours and 3885 million cubic meters respectively. As the epidemic has recently been largely brought under control, industrial and commercial activities are expected to resume at an accelerated pace to support energy demand. The company's operating performance is expected to accelerate this year. We expect wind power generation to grow by 13.6 per cent and 8.5 per cent year-on-year respectively in 2023-24, while natural gas sales rose 8.2 per cent and 7.4 per cent respectively over the same period.
Raise the profit forecast
Taking into account the above factors, we technically fine-tuned our 2022 shareholder net profit forecast and raised our 2023-24 profit forecast by 5.7 per cent and 5.5 per cent to 2.73 billion and 3.08 billion yuan, up 19.0 per cent and 13.0 per cent year-on-year.
Raise the target price and reaffirm the "buy" rating
We maintain a price-to-earnings ratio of 8.0 times the 2023 target, and correspondingly raise the H-share price from HK $5.28 to HK $5.58, corresponding to 55.0% room for growth. Reiterate the "buy" rating.
Risk tips: (1) the risk of accounts receivable, (2) the price of electricity connected to the grid has dropped sharply, and (3) the cost of natural gas has risen sharply.