Incident: The company announced its 2022 annual results, achieving annual revenue of 12.499 billion yuan (RMB, same below), an increase of 5.32% over the previous year; it achieved net profit of 3.485 billion yuan, an increase of 71.55% over the previous year, exceeding our previous forecast of 2,204 billion yuan.
The performance exceeded expectations mainly due to the four parts of falling financial costs+reduced maintenance costs+supplier compensations+recovery of bad debts. According to operating data disclosed by the company at the beginning of the year, the company achieved power generation capacity of 28.8 billion kilowatt-hours for the full year of 2022, an increase of 9.96% over the previous year, of 27.1 billion kilowatt-hours of wind power, an increase of 8.66% over the previous year, and 1,623 million kilowatt-hours of photovoltaics, an increase of 38.84% over the previous year. The growth rate of power generation is slightly higher than the growth rate of revenue. When calculated, feed-in electricity prices declined slightly. It is expected that electricity prices for stock projects will be stable, mainly affected by the increase in the share of affordable projects. The company's annual revenue increased by 631 million yuan year-on-year. The performance exceeded expectations mainly due to the decline in financial expenses, the reduction in maintenance costs, and the recovery of supplier compensation and bad debts. In particular, the first two were the more important fundamental changes: 1) Net financial expenses in 2022 were 1.91 billion yuan, a decrease of 190 million yuan compared to the same period in 2021, reflecting significant balance sheet optimization in the context of increased installed capacity. 2) Maintenance costs decreased by 190 million yuan year-on-year in 2022, which is expected to be related to optimization of operation and maintenance processes and improved fan supplier services; 3) Net other revenue in 2022 reached 637 million yuan, an increase of 388 million yuan over the previous year, mainly due to receiving compensation of 333 million yuan from fan suppliers in 2022 (loss of revenue due to lack of services and products during the warranty period). The remaining part is mainly wind power value-added tax is levied and refunded, and the scale is basically stable; 4) Accounts receivable deducted in 2021 are reduced by 210 million yuan, 2022 will Some bad debts were recovered, and the net impairment amount was -196 million yuan, an increase of 406 million yuan over the previous year.
Subsidy repayments have been greatly improved, dividend amounts have increased dramatically, and project verification results may have been better than expected. Judging from the balance sheet and cash flow statement, the company's accounts receivable balance at the end of 2022 was 14.468 billion yuan, a year-on-year decrease of about 2 billion yuan compared to the end of 2021, the first decrease since 2015; the cumulative amount of subsidies recovered throughout the year was 8.255 billion yuan, a record high. According to the company's statement, most of the company's projects have already been approved for renewable energy electricity price subsidies, and several projects are being applied for approval. The company expects no foreseeable hurdles to block applications. Judging from the negative value of credit impairment losses throughout the year, the company's project inspection results may be better than expected. The company's net annual fundraising cash flow was $7.067 billion (+2,263 billion yuan for the same period in 2021), including a dividend of 5 points per share (total of $364 million), and most of the remaining cash recovered was used to repay debts. The company's balance ratio at the end of 2022 was 64.87%, down 3.56 percentage points from the beginning of the year, and the size of perpetual debt at the end of the year was 14.31 billion yuan, which was basically the same as at the beginning of the year.
The Sanbei region has been given an important mission under the dual carbon strategy, and the company's development is expected to accelerate in 2023. The company is the largest wind power operator in Inner Mongolia, with experienced local operators and a good cooperative relationship with the government. It is expected to enjoy the development dividends in the context of accelerated development of the Sanbei New Energy Base. 2020-2022H1 has received a total of about 9 GW of nuclear preparation projects, but the new production of the 2021-2022H1 is less than 1 GW. There is still a big gap between the “14th Five-Year Plan” target. It is expected that new installations will accelerate significantly from 2023. Furthermore, as early as the company's listing, the group promised that the company had the right to choose new business opportunities and priority purchasing rights for wind, solar and biomass power generation businesses within the Datang Group and its subsidiaries. At the special promotion conference on deepening the reform of state-owned listed companies held in May 2022, the State Assets Administration Commission clearly demanded that efforts to inject high-quality assets into listed companies should continue to be strengthened, and policy support from the Group and the State Assets Administration Commission is expected to open the company's new energy business development limit.
Profit forecasting and valuation: Combining the performance of the annual report, adjust the company's net profit forecast for 2023-2024 to 32.38 billion yuan (2,796 and 3.286 billion yuan respectively before adjustment), adding the 2025 net profit forecast to 4.91 billion yuan. The current stock price corresponds to PE in 2023-2025 by 6, 5, and 4 times, respectively (PE calculation does not include interest on perpetual bonds, interest on perpetual bonds of 501 million yuan). We believe that the company's stock price has a cost-effective ratio and room for improvement to maintain the “buy” rating .
Risk warning: New energy construction is falling short of expectations, and spot market reform has had an adverse impact