Incidents:
The company announced results for the first three quarters of 2023. In the first three quarters of 2023, the company completed revenue of 28.097 billion yuan, a year-on-year decrease of 7.00%; completed net profit of 6.379 billion yuan, an increase of 18.95% over the previous year.
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The company's total installed capacity has reached 32.8GW. Electricity volume in the first three quarters increased 8% year on year. As of the end of September, the company's total installed capacity was about 32.8 gigawatts, including 26.8 gigawatts for wind power, 1.9 gigawatts for thermal power, and 4.2 gigawatts for other renewable energy. Judging from the first three quarters of this year, the number of hours used by wind power in China increased by 49 hours over the same period last year, while photovoltaics decreased by 45 hours. Overall, in the first three quarters, the company completed power generation capacity of 55.5 billion kilowatt-hours, up 7.87% year on year. Among them, wind power generation was 44.7 billion kilowatt-hours, up 6.17% year on year; thermal power generation was 7.6 billion kilowatt-hours, down 4.76% year on year; and power generation from other renewable energy sources was 3.2 billion kilowatt-hours, up 136.43% year on year.
The company's profitability increased. Net profit for the first three quarters increased 19% year on year. The company completed revenue of 28.097 billion yuan in the first three quarters of 2023, a decrease of 7.00% year on year. Among them, the wind power division (excluding revenue from concession services) was 20.857 billion yuan, up 3.53% year on year; the thermal power division was 6.214 billion yuan, down 34.17% year on year; other divisions were 1,025 billion yuan, up 68.48% year on year. The company's operating profit margin for the first three quarters was about 39.69%, an increase of 4 percentage points over the previous year. We think this may be due to an increase in wind power utilization hours, a decrease in coal prices, etc. In addition, the company's net financial expenses decreased by 14.4% year over year to 2,511 billion yuan. Overall, the company achieved net profit of 6.379 billion yuan in the first three quarters, an increase of 18.95% over the previous year.
The company has sufficient reserves of new energy resources, and installed capacity is expected to accelerate expansion
The company has sufficient project reserves. A new development agreement of 29.34 gigawatts was signed in the first half of the year, an increase of 77.94% over the previous year. Among them, 15.32 gigawatts of wind power and 14.02 gigawatts of photovoltaics are located in regions with good resources; in the first half of the year, it achieved a cumulative development target of 4.01 gigawatts, of which a development index of 3.07 gigawatts was obtained through fair bidding, including wind power 1.58 gigawatts and 1.49 gigawatts of photovoltaics. At present, component prices have declined somewhat. Meanwhile, the “Administrative Measures on Wind Farm Renovation, Upgrading, and Decommissioning” was officially issued in June this year. The renovation of the company's old wind farms and construction of new projects are expected to accelerate.
Profit forecasting and valuation
Considering the company's third-quarter performance, new installed capacity, and current project reserves, net profit for 2023-2025 is estimated to be 82,93.106 billion yuan, corresponding to PE 7, 6, and 5 times, maintaining the “buy” rating.
Risk warning: risk of a sharp decline in the macroeconomic economy; risk of falling short of expectations in implementation of policies; risk of falling short of expectations; risk of excessive industry competition; risk of continued underpayment of subsidies; risk of company development projects falling short of expectations, etc.