Xintian Green Energy announced its 2023 interim results. The company's operating income was 10.047 billion yuan, down 1.74% year on year; net profit attributable to shareholders of listed companies was 1,439 million yuan, down 10.97% year on year; basic earnings per share was RMB 0.34, lower than our expectations.

Wind power generation increased slightly year over year. In the first half of 2023, the power plants controlled by the company achieved a power generation capacity of 7.719 billion kilowatt-hours, an increase of 1.91% over the previous year. The number of hours that can be used for wind power fell 9.5 hours year on year to 1339.5 hours, but it was still 102.5 hours higher than the national average of 1237 hours. However, due to the decline in feed-in tariffs and the increase in income tax, profits in the wind power and photovoltaic sector fell 7.94% year on year to 1,333 million yuan. As of the first half of 2023, the company's cumulative wind power holding/management installed capacity was 6,089.85 MW/6,350.45 MW, respectively, and 92.8 MW of additional commercial installed capacity was added in the first half of the year. The company actively promoted the development and construction of wind power projects. In the first half of the year, the Ruoqiang Luobuzhuang and Chongli wind power hydrogen production phase II projects were connected to the grid for power generation. At the same time, a number of onshore wind power projects nationwide and offshore wind power projects in Hebei Province are under construction. The company's wind power business has excellent operating efficiency, rich project reserves, and good prospects for development.

The scale of natural gas sales and profitability declined. The company's total gas transmission volume in the first half of 2023 was 2,385 million meters? , down 2.9% year on year, mainly due to sluggish downstream demand. Retail volume fell 5.8% year on year to 2,059 billion meters? The result. At the same time, due to the reduction in transportation fees by the Hebei Provincial Bureau of Commodity Prices in 2022, the company's gross sales gap declined. As a result of both the decline in volume and profit, the company's natural gas business sector profit fell to 3.1 billion yuan, a year-on-year decrease of 47.7%.

Natural gas infrastructure is improving day by day, and LNG terminals will continue to contribute to increased performance. The first phase of the Tangshan LNG terminal project with a turnover capacity of 5 million tons/year was officially put into operation in June. The company signed a long-term agreement of 1 million tons/year with Qatar Energy Company and is actively cooperating with third parties, including Hong Kong and China Smart Energy, which is expected to continue to increase the utilization rate of receiving stations. As the production capacity of LNG terminals gradually rises, we expect LNG terminals to be profitable next year and enhance the company's performance over the long term. At the same time, the company has operated a total of 9,327.49 kilometers of pipelines. As the company continues to promote the second phase of the LNG receiving station project and the construction of several internal pipeline networks in Hebei Province, the company will continue to increase its business coverage and consolidate its superior position in natural gas supply in North China.

Improve the layout of diversified energy storage businesses. The company is actively exploring various energy storage projects and is currently investing in the construction of a pumped storage power station in Fengning, Hebei. As of June 30, units 1-10 of the project have been put into operation, and units 11-12 have also been installed normally. At the same time, the company is actively developing new energy storage projects including flywheel energy storage. Currently, the industry is gradually promoting the model of adding wind power and photovoltaic projects to allocate energy storage to improve the level of energy utilization. Looking forward to the future, the company can leverage the synergistic advantages of its main business by establishing combustion engine power plants and combining gas with new energy to drive continuous growth in the installed capacity of wind power and photovoltaics.

Maintain a “buy” rating. As of June 30, 2023, the company had cash of 3.272 billion yuan on hand. After issuing the GDR, the company's financing capacity will be further enhanced. The decline in the company's gross gas sales margin was compounded by a drop in grid electricity prices, and the profitability of the company's two main businesses fell short of expectations. At the same time, the business situation of the wind power business, which accounts for a relatively high profit, was affected by wind conditions in the second half of the year, and there is still great uncertainty. We lowered the company's net profit forecast for 2023-2025 to 24.77, 30.53, and 3.608 billion yuan (before adjustment, respectively, 29.94, 3.618 billion yuan, and 3,913 billion yuan), and EPS to 0.55, 0.68, and 0.80 yuan/share. Under the current stock price, PE corresponding to 2023-2025 is 6.0, 4.6, and 3.7 times, respectively. Maintain a “buy” rating.

Risk warning: Natural gas sales fell short of expectations, and the scale of additional grid-connected installations fell short of expectations.