Performance in the first half of the year reversed losses, with Q2 continuing to improve month-on-month. The company released its 2023 annual report. In the first half of the year, it achieved revenue of 20.2 billion yuan (+25.4% year-on-year) and net profit of 788 million yuan (Q1 and Q2 were 335 million yuan and 453 million yuan respectively). The company's revenue has increased dramatically and its performance has been reversed mainly due to:
(1) The volume and price of power generation business increased sharply, with feed-in electricity prices +4.6% and feed-in electricity volume +27.7%; (2) the cost of coal used fell, and the unit price of standard coal entering the factory was 1,220 yuan/ton (-12.1% year-on-year); (3) Turkey's coal power project 22H2 was put into operation, and 23H1 achieved net profit of 473 million yuan. In addition, the company's investment income reached 440 million yuan; operating cash flow was affected by reductions in recycling subsidies, etc. -55.6% over the same period.
The amount of power generated increased by nearly 30% over the same period last year, and it is expected that domestic thermal power profits will continue to recover. The company announced that in the first half of the year, the company completed 35 billion kilowatt-hours of electricity generation (+27.6% YoY), of which 24.5 billion kilowatt-hours of coal power (+37.7%, including 5.3 billion kilowatt-hours for Turkish power plants), 2.9 billion kilowatt-hours of gas power (+7.7% YoY), 5 billion kilowatt-hours of wind power (+10.0% YoY), and 2.7 billion kilowatt-hours of photovoltaics (+9.6% YoY); feed-in electricity prices reached 0.62 yuan/degree. It is calculated that in the first half of the year, the electricity profit of Turkish power plants was 9.4 points, and the domestic thermal power loss exceeded 7 cents; looking forward to Q3, the recovery of incoming water and the improvement of the coal supply and demand pattern, and we expect domestic thermal power profits to continue to recover.
Coordinate domestic and foreign countries to vigorously promote the clean energy transition. The company announced that 2023H1 holds 21.15 GW of installed capacity, 8.42 GW of new energy, and clean energy accounts for 53.43%. In the first half of the year, a total of 0.9 GW of competitive capacity was obtained, including 0.45 GW from Shanghai Sea Breeze; various photovoltaic projects in Japan, Hungary, and Turkey were put into operation and started. New energy target for 2023: Ensure approval/commencement of construction/commissioning of 7.9/4.6/6.8 GW, and strive to reach 11/6/10 GW. We look forward to speeding up green power construction in the second half of the year.
Profit forecasts and investment recommendations. It is estimated that the company's net profit from 2023 to 2025 will be 25.59, 34.24 billion yuan, and 4.284 billion yuan, respectively, and the corresponding PE according to the latest closing price will be 10.29, 7.69, and 6.15 times, respectively. The company is promoting the clean energy transition, and the new energy plan is strong, and the thermal power performance is expected to bottom out and pick up. Referring to peer valuations, the company was given 15 times the PE valuation in 2023, corresponding to a reasonable value of 13.62 yuan/share, maintaining the “buy” rating.
Risk warning. Coal prices continue to rise; risks such as project construction progress and electricity demand falling short of expectations.