The 2022 results are in line with our expectations
The company announced its 2022 results: revenue of 18.56 billion yuan, +15% year on year; Guimu's net profit was 2,294 billion yuan, -0.04% year on year, corresponding to profit of 0.55 yuan per share, in line with expectations. Of these, 4Q22 revenue was 5.51 billion yuan, +4.1% year on year, and net profit of the mother was 628 million yuan, -1.6% year on year. The company plans to pay a final dividend of 0.196 yuan/share.
In '22, the company achieved a gas transmission volume of 4.50 billion square meters, +8% year on year, and wind power generation capacity of 14 billion kilowatt-hours, +4% year on year.
Development trends
Profitability growth in the natural gas business in '23 was challenging. We think the company's natural gas business may be under pressure in '23. Based on 1) Industrial gas volume accounts for a relatively high share of the company's gas sales structure. As gas prices remain high and the downstream glass/ceramics industry is declining, we think the company's gas volume growth rate may decline throughout the year. Furthermore, gas pipeline transportation fees within Hebei Province have been reduced to a certain extent, and we judge that it is putting some pressure on the annual price difference. Currently, the company expects gas transmission volume to increase by 2%-5% year-on-year in '23, and the price difference falls by 0.03-0.04 yuan/square meter. We think it is quite reasonable. 2) The Tangshan LNG terminal will be put into operation and rehabilitation within the year. There is still a gap between the amount of the company's LNG resources and the break-even point of the receiving station, and the receiving station may lose money throughout the year.
The construction of large-scale landscape projects is still awaiting approval. The progress of the company's new energy project project in '22 was delayed due to the epidemic. The installed capacity of the new holding was only 138MW throughout the year, which is slightly lower than the company's management guidelines in the early stages. Looking ahead, considering that the landscape index of Hebei Province in '22 has not yet been officially approved, we think that the new installations in '23 were mainly from projects still under construction at the end of '22 (about 516MW), and that large-scale (GW level) landscape project construction may require approval of Hebei Province's Scenery Index for '22 before it starts to advance.
Saving assets helps increase the medium- to long-term returns of the company's new energy projects. We believe that with the increase in the installed capacity of domestic wind power plants, the importance of pumping power plants in the peak adjustment of power grids will become more apparent. The company holds 20% of the shares in Fengning Power Station (the company expects its installation to reach 3.6 GW by the end of 2023), and added 6.4 GW of savings agreement capacity in 22. We are optimistic that the company's savings project will drive a steady increase in the return rate of operating new energy projects after the company's savings projects are gradually put into operation.
Profit forecasting and valuation
The natural gas business may be under pressure in '23. We lowered our net profit of '23 by 16.6% to 2.52 billion yuan and introduced our '24 profit forecast of 3,075 billion yuan for the first time. The current price of A/H shares corresponds to 16x/5x P/E in '23 and 13x/4x P/E in '24, taking into account profit forecast adjustments and peer valuations, maintaining the A/H stock outperform the industry rating and target price of HK$13.5/HK$4.0, corresponding to an upward space of 43%/17%, respectively. Our target prices for A/H shares correspond to 22x/6x P/E in '23 and 18x/5x P/E in '24, respectively.
risks
International gas prices have risen sharply, and the installed capacity of new energy sources has fallen short of expectations.