Profit increased sharply in the first half of 2023: in the first half of 2023, the company achieved revenue of RMB 21.32 billion, an increase of 4.98% over the previous year, return profit of 1.85 billion yuan, an increase of 117.64% over the previous year, and basic profit of 0.14 yuan per share, an increase of 100% over the previous year. Segment net profit split: thermal power sector profit of 394 million yuan, wind power profit of 1,015 million yuan, photovoltaic profit of 584 million yuan, hydropower loss of 74 million yuan, and energy storage business profit of 0.2 billion yuan.
The results of the coal-fired power joint ventures were remarkable, with significant results in turning losses in the thermal power business of the company in the first half of the year. Last year, it cooperated with China Coal Group to lose some of the thermal power plants. The cost of standard coal fell to 998 yuan/ton in the first half of the year. The unit fuel cost fell 10.16% year on year, and coal consumption for electricity supply fell 0.82% year on year. As of the first half of the year, the company director's coal coverage rate was as high as 95%. The coal power joint venture locked in relatively favorable coal costs, making the company's thermal power business less sensitive to fluctuations in electricity prices. In the first half of 2023, due to a sharp increase in imported coal and a significant increase in domestic coal production, coal prices are expected to drop sharply. It is expected that with the recovery of hydropower in the second half of the year, coal prices are expected to remain relatively low, and the company's thermal power business profits are expected to increase significantly throughout the year.
Group asset injection accelerates green power development: The company signed an agreement with China Power Investment Corporation in July to acquire five clean energy project companies for 10.785 billion yuan in cash. The acquisition involved a power generation project with a total capacity of 9 GW, making it the Group's largest internal clean energy asset transaction after asset injection in 2022. After the transaction was completed, the company's business covered 10 regions across the country. It has a driving effect on promoting market penetration and enhancing local competitive advantage. Furthermore, module prices dropped rapidly in the first half of the year, greatly reducing the construction costs of photovoltaic projects, and the yield of new construction projects increased markedly.
It is estimated that by the end of 2023, the company's consolidated clean energy installation will reach 34 GW, and clean energy will account for more than 75% of the installed capacity.
The target price is HK$4.51, maintaining the purchase rating: The company's performance in the first half of the year was able to double even with abnormal incoming water. The company's energy storage project has now signed a 5GW contract. Revenue and profit contributions will be reflected in the second half of the year, and superimposed hydropower is expected to recover in the second half of the year. Looking ahead to the whole year, the company's thermal power business is leading in cost control and profitability in the industry. The Group's asset injection is expected to complete settlement within the year and enhance the company's fourth-quarter results. The company's net profit from 2023-2025 is estimated to be 41/59/6.9 billion yuan, an increase of 66/43/18% over the previous year. The company is expected to have a reasonable market value of HK$55.8 billion in 2023, maintaining a target price of HK$4.51, corresponding to 12.4 times PE in 2023. There is room for an increase of 48% compared to the current price, maintaining the buying rating.
Risk factors: New installations fell short of expectations, electricity demand fell short of expectations, and feed-in electricity prices dropped sharply.