3Q23 performance is in line with our expectations
The company announced results for the first three quarters of 2023: revenue 13.124 billion yuan, year-on-year + 0.6%; return to the mother net profit of 1.506 billion yuan, corresponding to 0.35 yuan per share,-9.4% year-on-year, in line with expectations. Of this total, 3Q23's income was 3.076 billion yuan, + 9.0% compared with the same period last year, and the net profit was 68 million yuan, + 36.9% compared with the same period last year.
In terms of natural gas business, 3Q23 sold 770 million square meters of gas, + 30.3% year-on-year, of which retail gas volume was 467 million square meters, + 31.1% year-on-year; in addition, benefiting from the commissioning of the Tangshan LNG project, LNG sales volume was 93 million square meters, + 92 million square meters last year.
In terms of renewable energy business, 3Q23 produces electricity 2359GWh, with an average grid electricity price of 0.44 yuan / KWh for 1-3Q23 compared with the same period last year.
Trend of development
The load rate of Tangshan LNG wharf for 24-25 years is the key point of market concern. In June, the first phase of Tangshan LNG Terminal, with a production capacity of 5 million tons / year, has been put into trial operation. Taking into account the international spot supply and demand of LNG, we expect that the possibility of large-scale spot imports of the company in 24-25 years is relatively low, so we believe that the company still needs to ensure that the load rate of Tangshan LNG terminal is maintained at a relatively reasonable level to ensure profitability through the new growth agreement (currently 1 million tons / year in hand) / external leasing window.
Peak shaving capability is an important core competitiveness of the company's renewable energy business. We believe that with the growth of domestic landscape installed capacity, the importance of peak regulation capacity to the development of renewable energy business of power generation companies is becoming more and more prominent.
At present, the company holds a 20% stake in Fengning pumping and Storage Power Station (installed capacity 3.6GW), and is actively acquiring new pumped storage / gas power generation peak regulation projects, in which Baoding Laiyuan Huanghuatan 1.4GW pumped storage project has been submitted to the State Energy Administration for approval. We believe that the gradual commissioning of peak regulation assets will not only bring new profit increments for the company, but also gradually lead to a steady increase in the rate of return of the company in operating new energy projects.
Profit forecast and valuation
Keep profit forecasts for 2023 and 2024 unchanged. The current A-share price corresponds to a price-to-earnings ratio of 13.8 times 2024 / 11.3 times earnings for 2023 Universe. The current H-share price corresponds to a price-to-earnings ratio of 4.0 times 2024 / 3.2 times earnings for 2023 Universe. A shares maintain an outperform industry rating and a target price of 10.00 yuan, corresponding to 16.6 times 2023 price-to-earnings ratio and 13.6 times 2024 price-to-earnings ratio, which has 20.9% upside compared to the current stock price. H shares maintain an outperform industry rating and a target price of HK $3.50, corresponding to 5.2 times 2023 earnings and 4.1 times 2024 earnings, with 29.6 per cent upside from the current share price.
Risk
Natural gas prices fluctuated sharply, and the recovery of renewable energy subsidies fell short of expectations.