Description of the event
The company released the 2023 three-quarter report: in the third quarter of 2023, the company achieved operating income of 16.834 billion yuan, a year-on-year decrease of 0.24%; net profit of 870 million yuan, an increase of 359.40% over the previous year.
Incident comments
A high base limits the growth rate of thermal power, and the fall in coal prices unleashes thermal power performance. In the third quarter, the company's coal power generation completed 27.493 billion kilowatt-hours, a year-on-year decrease of 11.19%. The year-on-year decrease in electricity volume was mainly due to the high base in the third quarter of last year and the impact of the squeezing of hydropower output since the second half of the year. However, on a month-on-month basis, coal power generation increased by 16.14% in the third quarter. Gaspower achieved a power generation capacity of 6.104 billion kilowatt-hours in the third quarter, an increase of 21.23% over the previous month, mainly due to improved demand during the peak summer season. In terms of electricity prices, the electricity supply and demand situation in Guangdong Province improved markedly in the third quarter compared to last year, and since water from the southwest also improved compared to the second quarter, affected by this, the average electricity price in Guangdong's monthly bilateral negotiations in the third quarter was 509.87 yuan/megawatt-hour, a decrease of 5.63% over the previous month. Although the share of monthly electricity was limited, the decline in electricity prices also limited the growth in the company's thermal power revenue side to a certain extent. In terms of costs, coal prices have declined rapidly since the third quarter. The average liquidation price of Q5500 coal at Qinhuangdao Port was 866.19 yuan/ton, down 5.27% from the previous month and 31.51% from the previous year. Thanks to this, the company's fuel cost expenditure for the third quarter was 10.627 billion yuan, an increase of only 2.69% over the previous month, far less than the month-on-month increase in electricity volume of coal, electricity and gas power, which exceeded 16%. The year-on-year decline in fuel cost expenditure reached 22.93%. Overall, driven by the rapid release of pressure on fuel costs, the company's thermal power business performance increased significantly in the third quarter.
Investment income and impairment limited performance, and thermal power operations led growth in the third quarter. In the third quarter, the company's wind power generated 803 million kilowatt-hours, an increase of 6.78% over the previous year. The increase in electricity volume was mainly driven by additional installed capacity. PV completed 123 million kilowatt-hours of power generation in the third quarter, all of which were net additional electricity. However, since the third quarter is the season when wind power output is weak, on a month-on-month basis, wind power generation in the third quarter decreased by 36.32%. Although photovoltaic power generation increased by 284.38% month-on-month, due to its small size, the company's new energy revenue declined in the third quarter. Furthermore, the company completed 199 million kilowatt-hours of hydropower generation in the third quarter, an increase of 314.58% over the previous month, and completed biomass power generation of 179 million kilowatt-hours, a decrease of 8.21% over the previous month. Therefore, the company's non-water renewable energy performance is expected to improve significantly from month to month. Overall, the profit of the company's clean energy business was under pressure and the profit of thermal power improved sharply. As a result, the company achieved gross profit of 3.386 billion yuan in the third quarter, an increase of 54.32% over the previous year, and a year-on-year increase of 706.90%. In addition to the main business, investment income was under pressure due to the fall in coal prices and the seasonal decline in the performance of new energy assets. The company's investment income in the third quarter was 268 million yuan, a decrease of 37.19% over the previous month. In addition, the company carried out an inventory of various assets in the third quarter and carried out flow transformation for assets such as Honghai Power Generation and Jinghai Power Generation. An impairment loss of 378 million yuan was calculated, limiting the growth of the company's performance to a certain extent. Overall, however, driven by a significant recovery in the operation of its main thermal power business, the company achieved net profit of 870 million yuan in the third quarter, an increase of 13.30% over the previous month, and the year-on-year growth rate was also as high as 359.40%.
Investment advice and valuation: According to the latest financial data, we adjust the company's profit forecast. We expect the company's EPS for 2023-2025 to be 0.50 yuan, 0.69 yuan and 0.81 yuan respectively, and corresponding PE to be 10.77 times, 7.87 times and 6.68 times, respectively, maintaining the company's “buy” rating.
Risk warning
1. The risk that the progress and benefits of the commissioning of new construction projects fall short of expectations;
2. Wind conditions and lighting resources fall short of expected risks