Core ideas:

The performance of 23Q1-3 is under pressure, and the net profit is-65% compared with the same period last year. The company released three quarterly reports for 23 years, 2023Q1-3 achieved a net profit of 1.137 billion yuan (- 64.7% compared with the same period last year), of which the net profit of Q3 was 224 million yuan (- 83.0% compared with the same period last year), mainly due to the decline of electricity generation in the river basin. The company continued to optimize the debt structure, and the asset-liability ratio decreased to 52.5%. The financial expenses of 23Q1-3 decreased by 140 million yuan (- 24.1%) compared with the same period last year. Due to the decrease in revenue from power generation, 23Q1-3 has a net operating cash flow of 3.25 billion yuan (- 45.6% compared with the same period last year).

50% of the incoming water is dry, and the electricity price fluctuates gently. The inflow from the Hongshui River Basin has been dry since 2023, and the hydropower generation capacity of 23Q1-3 is 11.7 billion kWh (year-on-year-45.8%), of which Q1/Q2/Q3 generation is-32.7% and 54.2%, respectively, compared with the same period last year. Longtan and Yantan (66% installed) Q1-3 power stations respectively generate 56.5% and 53.2% of electricity compared with the same period last year. Thermal power / wind power / photovoltaic power generation is + 75.2% less than the same period last year. "5.4% Universe" 192.9%, respectively, to alleviate the impact of hydropower fluctuations. In terms of electricity prices, according to the company's annual report, Guangxi has cancelled a number of hydropower profit reduction policies such as a 10% reduction in hydropower prices during the high water season since 2021, and the company's average electricity price has rebounded. At the same time, Longtan Hydropower Station is included in the 14th five-year Plan guaranteed power supply of Southern Power Grid to achieve "full price protection", and the stability of electricity price helps to slow down the company's performance fluctuation.

We will vigorously develop new energy sources and open up the second growth point. Since 2021, the company has launched new energy construction, relying on Hongshuihe cascade power station to promote the integration of water and scenery base. according to the statistics of the company's investment announcement, the company plans to invest in nearly 40 scenic projects since 2021, and some of them have been put into production.

According to the company's operation announcement, by the end of September, the installed capacity of the company was 0.77 and 0.38 GWMagne23Q1-3, respectively, with a total generating capacity of 1.719 billion kilowatt-hours (year-on-year + 22.2%).

Profit forecast and investment advice. It is estimated that the return net profit of the company in 2023 to 2025 will be 1.34 billion yuan respectively, and the PE corresponding to the latest closing price will be 12.8 times that of 32.3 Universe.

Hydropower faucet high dividend allocation value is outstanding, new energy business growth space is large. With reference to the industry valuation, give the company 18 times PE valuation in 2024, corresponding to the reasonable value of 6.80 yuan per share, and maintain the "buy" rating of Laureate Power.

Risk hint. Fluctuation of incoming water; fluctuation of feed-in electricity price; project construction is not as expected, etc.