Core views:
The performance of Laishui Bianjiao Hydropower declined, and 23H1's net profit was -37.6% year-on-year. The company released its 2023 interim report. 2023H1 achieved operating income of 9.089 billion yuan (-14.47%) and net profit of 901 million yuan (YoY) of 901 million yuan (YoY), mainly due to a sharp decline in hydropower profits, while thermal power profits have reversed losses, and the new energy business has grown steadily. 23H1 hydropower/thermal power/green power revenue was -11.41/+597/+192 million yuan, respectively. Net profit was -1,029/+4.51/0.42 billion yuan, respectively.
Water and fire complement each other and fluctuate smoothly, and the amount of electricity generated from new energy sources increased by 30% over the same period last year. According to the company's financial report, 2023H1 holds 12.75GW of installed capacity, with clean energy accounting for 68% of installed capacity. In the first half of the year, the company achieved a power generation capacity of 16.133 billion kilowatt-hours (-9.1% year on year); due to insufficient water storage at the hydropower plant at the beginning of the year and the lack of incoming water this year, hydropower generation capacity was -47.5%. Since June and July, the company's hydropower generation capacity has improved. In June and July, the company's hydropower generation volume was +31.7%/+61.4%, respectively; with the fall in electricity prices, the 23H1 power generation volume was +19.8%. At the same time, with the fall in coal prices, Huoelectronics Ezhou power generation achieved a profit of 116 million yuan; in the first half of the year The machine reaches 0.34 GW At 3.46 GW, power generation from new energy sources was +30.5% year-on-year, and 23H1 achieved net profit of 371 million yuan.
Water, fire, and wind storage have developed collaboratively, and there is broad room for growth. According to the company's official website, the company plans to have a total installed capacity of 22 GW by the end of the 14th Five-Year Plan, including more than 15 GW of renewable energy. Hydropower: Linxi River Hydropower has been included in the 14th Five-Year Plan of Hubei Province; Thermal power: 2 1GW units are under construction in Yicheng, Xiangyang, and construction progress is currently more than half; Scenery: The planned installation of new energy will exceed 10 GW by the end of the 14th Five-Year Plan. The average annual increase of 2.5 GW for the next three years will be 2.5 GW, and the installed CAGR of new energy will reach 50.8% in 22-25. Pumped storage:
A total of 4.4 GW of installed capacity has been reserved for the 3 approved projects, of which the original Luotian Pingtan project has already started.
Profit forecasts and investment recommendations. It is estimated that the company's net profit from 2023 to 2025 will be 22.3/261/30.01 billion yuan, respectively, and the corresponding PE at the latest closing price will be 12.7/10.9/9.5 times, respectively.
The company's current PB is only 0.9 times. Thermal power has reversed losses, hydropower profits are expected to recover, and there is plenty of room for growth in new energy+pumped storage. Referring to interbank valuations, the company was given 15 times the PE valuation in 2023, corresponding to a reasonable value of 5.14 yuan/share, maintaining Hubei Energy's “buy” rating.
Risk warning. Project construction has fallen short of expectations; incoming water has fluctuated; coal prices have risen sharply, etc.