Description of the event
The company released the 2023 three-quarter report: in the third quarter, the company achieved operating income of 8.253 billion yuan, a year-on-year decrease of 3.40%; net profit of 1.15 billion yuan, a year-on-year increase of 12.59%.
Incident comments
A high base limits wind power output, and cost control guarantees performance growth. In the third quarter, the company's wind power generation completed 11,565 billion kilowatt-hours, a year-on-year decrease of 2.51%. Correspondence is that by the end of the third quarter, the installed capacity of wind power owned by the company reached 267.717 million kilowatts, an increase of 4.12% over the previous year. In other words, the company's wind power utilization hours in the third quarter of the year declined, mainly due to the impact of last year's extremely high wind power utilization time base: the country's wind power utilization hours in the third quarter of 2023 were 428 hours. Although it decreased by 7.36% year on year, it was still the second highest in the past ten years. Looking at specific provinces, the year-on-year decrease in onshore and offshore wind power generation in Jiangsu Province and 16.37%, respectively, was the province that mainly affected the reduction in the company's wind power volume. The company's thermal power generation capacity in the third quarter was 2,618 million kilowatt-hours, a year-on-year decrease of 5.04%. This is also due to last year's high base and the large amount of hydropower in the third quarter of this year, which squeezed thermal power output. However, under the influence of the recovery in fuel cost pressure, the company's thermal power business performance may still achieve a year-on-year recovery. The company's other renewable energy sources completed power generation capacity of 1,575 billion kilowatt-hours in the third quarter, a year-on-year increase of 197.86%, an increase of 101.11 percentage points over the first half of the year. The rapid growth in other renewable energy sources was mainly driven by the expansion of installed capacity. By the end of the third quarter, the company's other renewable energy installed capacity reached 4.162,800 kilowatts, an increase of 226.29% over the previous year. Overall, due to pressure on thermal power and wind power, the company's revenue for the third quarter decreased by 3.40% year on year. Although the company's revenue side was under pressure, the company strictly controlled expenses by replacing high-interest debt. The company's financial expenses in the third quarter were 879 million yuan, a decrease of 17.97% over the previous year, and the company achieved investment income of 68 million yuan in the third quarter, an increase of 123 million yuan over the previous year. Overall, although the main wind power business is under pressure, the company achieved net profit of 1.15 billion yuan in the third quarter, an increase of 12.59% over the previous year, with the help of the company's continuous control of expenses and investment income from turning losses into profits.
Obtain a large amount of reserve resources to ensure the rapid growth of the company. In the first half of 2023, the company signed a new development agreement of 29.34 million kilowatts, an increase of 77.94% over the same period last year. They are all located in regions with good resources, and achieved a cumulative development target of 4.01 million kilowatts in the first half of the year. The company's abundant resource reserves will be an important guarantee for completing the installation of 30 million kilowatts of new energy during the “14th Five-Year Plan” period. Furthermore, since November 2022, prices in all parts of the photovoltaic industry chain have been rapidly recovering, and the slope of the company's new installed capacity and profit quality are also expected to improve at an accelerated pace. Against the backdrop of sufficient resource reserves and the continuous decline in prices in all parts of the photovoltaic industry chain, the company's new installed capacity is expected to grow at an accelerated pace throughout 2023. Moreover, the “14th Five-Year Plan” National Energy Group aims to add 7,000-80 million kilowatts of installed capacity. Longyuan Electric Power, as the group's clean energy developer, is bound to undertake more new energy construction tasks. The group promises to inject other surviving wind power generation businesses into Longyuan Electric Power within 3 years after the stock exchange and asset acquisition transactions are completed, and the Group's subsidiary Longyuan Power has abundant wind power asset reserves outside of it. If Longyuan Electric completes the acquisition of the Group's wind power assets during the “14th Five-Year Plan” period at the same time as endogenous growth, and does not consider the divestment of thermal power assets, the company's additional installed capacity during the “14th Five-Year Plan” period may far exceed the scale previously planned.
Investment advice and valuation: According to the latest financial data, we adjusted the company's profit forecast. The 2023-2025 EPS is expected to be 0.98 yuan, 1.10 yuan and 1.24 yuan respectively, corresponding to PE 20.68 times, 18.41 times and 16.33 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.