1H23's net profit was +290.88% year-on-year, and the investment output of new energy has already exceeded that of the whole of last year

Changyuan Electric Power's announcement revealed that 1H23's revenue was +8.26% year-on-year to 6.92 billion yuan, and net profit was 380 million yuan, or +290.88%, within the performance forecast range of 345-425 million yuan; 2Q23's revenue was +10.07% year-on-year to 2,998 million yuan, and gross profit of +812.65% to 159 million yuan. We maintain our 23-25 net profit forecast of 8.2/14.0/18.01 billion yuan, and BPS of 3.77/4.19/4.69 yuan. The average PB value for thermal power/new energy generation in '23 was 1.08/1.38x (Wind unanimously expected). The “14th Five-Year Plan” company is making every effort to promote the construction of clean energy for scenic water, and strive to install more than 5 million kilowatts of new energy in 2025. The value is expected to be reassessed. The target price for 23 is 1.45 xPb, maintaining the target price of 5.47 yuan and the “increase in holdings” rating.

1H23 Coal prices are declining, costs have improved significantly, and profits have increased

At 1H23, the company's thermal power generation capacity was +7.25% year-on-year to 14.11 billion kilowatt-hours, and the thermal power unit utilization hours were +151 hours to 2243 hours; the company sold 104.758 million gigajoules of heat, +13.52% year-on-year. The company's 1H23 average feed-in price without tax dropped slightly by 3.2 yuan/MWh to 432.74 yuan/MWh, which is still at a high level; the average tax-free hot price increased by 5.58 yuan/kilojiao year on year to 58.78 yuan/gigajoute. 1H23, the company's profit increase is mainly due to: 1) The year-on-year decline in the unit price of standard coal led to a profit increase of 330 million yuan, a year-on-year increase of 270 million yuan in electricity sales, a year-on-year increase in profit of 58.43 million yuan in hot prices, and a year-on-year decrease of 8.86 million yuan in financial expenses.

1H23 put into production 780,000 kilowatts of new energy installed, exceeding the annual scale of last year (210,000 kilowatts) of 1H23. The company's new energy projects were started/under construction/put into operation 92/145/780,000 kilowatts, and obtained 1.8 million kilowatts of new energy project resources. Among them, the installed capacity of the company's new energy put into production in 1H23 is far higher than the annual scale of last year. As of the end of June 2023, the company's installed capacity of wind power/photovoltaics was 26.4/916,400 kilowatts (of which 189,800 kilowatts of photovoltaics have been installed at full capacity of the project). At 1H23, the company's wind/photovoltaic power generation capacity was +33.95%/+477.27% year-on-year, respectively, to 295/127 million kilowatt-hours. In 2023, the company's new energy project development plan is to start construction of 1.45 million kilowatts and put into production 1.1 million kilowatts. It aims to have more than 5 million kilowatts of new energy installed by the end of 2025.

The target price is 5.47 yuan, maintaining the “increase in holdings” rating

We expect the company to have a net profit of 82/14.0/18.01 billion yuan in 23-25, BPS of 3.77/4.19/4.69 yuan, a 23-year target of 1.45 xPb, a target price of 5.47 yuan, and maintain “increase in holdings”

ratings.

Risk warning: coal prices have risen sharply; electricity prices have been drastically adjusted; the commissioning of new projects has fallen short of expectations.