The net profit of 23H1 was 298 million yuan, an increase of 69.1% over the same period last year. Benefiting from the commissioning of new projects and better winds in Yunnan Province, 23H1 Wind Power Company's power generation increased by 191% compared with the same period last year, driving the revenue performance of the wind power sector to increase; the comprehensive financing cost was reduced to 3.19%, promoted financial cost savings, and contributed to the improvement of the rate of return of new projects. As a provincial platform, the company is expected to seize the opportunity of accelerating the development of photovoltaic and industrial chain price reduction in Yunnan Province, and accelerate the development of photovoltaic plate to enhance performance elasticity. We forecast that the company's net profit from 2023 to 2025 will be 484, 821, 000 respectively, maintaining the company's "buy" rating, with a target price of 13.50 yuan.

The net profit of 23H1 is 298 million yuan, and the performance is in line with expectations. In the first half of 2023, the company achieved operating income of 1.29 billion yuan, an increase of 5.2% over the same period last year, a net profit of 298 million yuan, an increase of 69.1% over the same period last year, and a year-on-year increase of 39.7% corresponding to EPS0.32 yuan, which was in line with expectations. From a quarterly point of view, 2023Q2's operating income was 640 million yuan, an increase of 6.0% over the same period last year; its net profit was 120 million yuan, an increase of 152.4% over the same period last year; and EPS0.13 yuan, an increase of 108.8% over the same period last year.

Laifeng year-on-year promotion of superimposed new projects put into production, promoting the company's electricity and performance increase. 23H1 completed the grid operation of all units of Tongquan Wind Farm (350MW) and the first batch of units of Yongning Wind Farm (750MW), promoting a year-on-year increase in wind power generation by 190.5% to 1.086 billion kWh. 23H1 Yunnan Province also contributed to the improvement of incoming wind power, and the average utilization hours of wind turbines controlled by the company increased by 190 hours (+ 12.3%) to 1731 hours compared with the same period last year. Benefiting from the high power growth, 23H1's wind power sector revenue rose 55.9% to 393 million yuan compared with the same period last year, driving the company's revenue growth despite the lacklustre performance of the salinization sector. Looking forward to 23H2, the performance increment brought by the commissioning of Tongquan and Yongning wind farms is expected to continue. In addition, the company successfully put into production of Jianshuitangliangzi wind farm (50W) in August, which is expected to further promote the company's wind power generation and revenue growth.

Invigorate idle funds-reduce financing costs, financial expenses are significantly saved compared with the same period last year. 23H1 Company uses idle funds to achieve financial income and interest income of 30 million yuan, of which interest income increased by 15 million yuan compared with the same period last year. At the same time, the company is also actively promoting the replacement of stock high-interest loans to achieve a reduction in financing costs. Comprehensive financing costs have been reduced by 27BP to 3.19% compared with the same period last year, and interest expenses have been reduced by 3 million yuan in the case of a significant increase in debt. Financial expenses have been reduced by 40% to 27 million yuan compared with the same period last year. Considering that the rate of return of the new scenic project is sensitive to the financing cost, the decline of the company loan interest rate will help to improve the profitability of the new project.

Resource advantage superimposed industrial chain price reduction, the company's green electricity plate is expected to expand rapidly. Affected by the expansion of silicon materials upstream, the price of 23H1 photovoltaic industry chain continues to decline, and the price of single crystal modules has recently dropped to less than 1.3yuan / W, and the rate of return of operators is expected to increase significantly. Yunnan Province has formulated a development plan for adding new photovoltaic 50GW from 2022 to 2024. As the new energy operation platform controlled by Yunnan SASAC, the company is expected to seize the development opportunities of new energy in the province, obtain high-quality resources to realize great-leap-forward development of photovoltaic plate and bring performance cash flow elasticity for the company.

Risk factors: the growth rate of installed capacity is lower than expected; the electricity price of market-oriented transactions falls sharply; the growth rate of electricity demand is lower than expected; the cost of new energy installation fluctuates; the company's high capital expenditure brings financing pressure; the recovery of corporate subsidies is not as expected.

Profit forecast, valuation and rating: in view of the significant reduction in the company's financing costs, after fine-tuning some assumptions, we adjust the company's 2023-2024 net profit forecast to 484 million yuan (the previous forecast value is 479,799 million yuan), and the new 2025 net profit forecast is 1.03 billion yuan, corresponding to the 2023-2025 EPS forecast is 0.53 EPS 1.12 yuan. The current stock price corresponds to the PE of 2023 to 2025, respectively, which is multiple of 21-13-10. We refer to the valuation level of 14 times the target PE of comparable new energy operators (China Longyuan Power Group Corporation, three Gorges Energy, Xintian Green Energy, Zhejiang Xinneng) in 2024 (based on the consensus expectation of Wind), and give 15 times the target PE in 2024, corresponding to the target price of 13.50 yuan, maintaining the "buy" rating.