Guangdong's largest listed electric power company, controllable and entrusted to manage the installation of super 40GW. The company is the largest listed power company in Guangdong Province. as of the end of 23H1, it has a controllable installed capacity of 31.5117 million kilowatts, of which the holding installed capacity is 29.7639 million kilowatts and the equity installed capacity is 1.7478 million kilowatts. In addition, the company is entrusted with managing the installed capacity of 885.4 kilowatts (6.65 million kilowatts of thermal power and 220.4 kilowatts of hydropower). The above controllable installed capacity and entrusted management installed capacity total 4005.37 kilowatts. It accounts for about 1/4 of the installed capacity of Guangdong Province.

Electricity prices rise and coal prices fall, and coal power performance is expected to increase. Coal power constitutes the main installed body of the company. at present, coal power is 20.55 million kilowatts in transportation and installation, accounting for 69.04% and 78.8%. In addition, coal power is under construction and 8 million kilowatts, or put into production during the 14th five-year Plan period. In 2021 and 2022, mainly restricted by high coal prices, the company's coal and power sector lost 40.12 and 3.951 billion yuan respectively.

23H1, mainly benefiting from the rise in electricity prices and the decline in coal prices, the company expects to achieve a net profit of 8-950 million yuan, a year-on-year return to profit (22H1 loss of 1.372 billion yuan). It is estimated that under the condition that other factors remain the same, the gross profit will increase by 777 million yuan for every 1 cent per kilowatt-hour increase in electricity price including tax. In 2023, the average transaction price of Guangdong's annual bilateral negotiation transaction increased by 56.84 yuan per megawatt-hour (including tax) compared with the same period last year. Assuming that the company's annual electricity consumption of Changsha accounts for 70%, and the monthly and spot electricity prices are the same as the same period last year, the annual electricity price of Changsha will increase gross profit by 3.1 billion yuan. In terms of cost, in 2022, the unit price of the company's standard coal is 1335.77 yuan / ton (excluding tax), 23Q1 is reduced to 1253.53 yuan / ton (excluding tax), and the company's 23H1 imports account for about 50%. With the downward movement of domestic and overseas coal price centers, the company's 23Q2 standard coal price is expected to decline month-on-month. It is estimated that when other factors remain the same, the gross profit can be increased by 246 million yuan for every 10 yuan / ton reduction in the unit price of standard coal including tax, and the company's coal and power performance is more flexible.

New energy increases profits and offshore wind power has a broad prospect. By the end of 23H1, the company has installed about 2.59 million kilowatts of new energy holdings, about 4.4 million kilowatts of construction, and has approved or filed about 1100 kilowatts. According to the planned launch time of the new energy project disclosed by the company, at least 1.86 million kilowatts of new energy is expected to be installed in 2023. Especially in terms of offshore wind power, Guangdong Province has one of the highest sea wind resources in the country, and the 14th five-year Plan has increased production by about 1700 million kilowatts. According to Guangdong's latest sea breeze competition plan, the provincial and state-administered sea area projects are 700kW and 16 million kilowatts respectively, and the feed-in electricity price is the benchmark price of coal in Guangdong Province. As a comprehensive power generation listing platform in Guangdong Province, the company has a sea breeze project of 1.2 million kilowatts. It is expected to achieve the development target of sea breeze project in 2023 and subsequent sea breeze competition, and the development and construction of sea breeze project is expected to provide continuous momentum for the company's performance growth.

Profit Forecast: the company's operating income from 2023 to 2025 is estimated to be 580.86, 65.326, and 78.957 billion yuan, the net profit of 23.59, 31.931, 0.188, and 0.80, respectively, corresponding to PE of 15.80, 11.67, and 8.91 times, respectively, maintaining the "buy" rating.

Risk hint: the drop in fuel costs is not as expected, and the development and construction of the project is not as expected.