Description of the event
The company announced a pre-increase in its 2023 annual results: in 2023, the company expects to achieve net profit of 5.723 billion yuan to 6.860 billion yuan, an increase of 40.29% to 68.16% year on year before retroactive adjustment; the caliber after retroactive adjustment will increase by 40.35% to 68.24% year on year.
Incident comments
Incoming water improved electricity prices, and hydropower performance continued to recover. Domestic incoming water continued to be repaired in the fourth quarter, and the company's hydropower generation capacity was 24.652 billion kilowatt-hours, an increase of 4.22% over the previous year. In terms of electricity prices, since Yangfanggou has yet to clarify the electricity price mechanism, electricity prices in the two hekou are temporarily settled according to the transition price. Both electricity prices are at a high level, and the share of electricity in both is expected to increase as incoming water is repaired. As a result, the hydropower feed-in price reached 0.303 yuan/kilowatt-hour in the fourth quarter, an increase of 8.21% over the previous year. Driven by a sharp rise in volume and price, the company's hydropower business performance in the fourth quarter is expected to increase significantly compared to the same period last year. Looking at the whole year, due to the impact of the La Niña phenomenon in the first three quarters, electricity consumption dropped too much due to poor incoming water across the country. In the fourth quarter, incoming water failed to reverse the previous decline. The company's hydropower generation capacity for the whole year was 94.206 billion kilowatt-hours, a decrease of 5.03% over the previous year. In terms of electricity prices, since the price of electricity sent to the Soviet Union by the company's Jinguan Power Pack changed from the previous linked local coal benchmark price to the electricity price linked to the annual electricity transaction price in Jiangsu Province, the electricity price of the Jinguan Power Pack achieved a year-on-year increase in electricity prices throughout the year. At the same time, compounding the increase in the electricity share of high-cost units such as Lianghekou and Yangfanggou, the company's annual utility feed-in price was 0.3 yuan/kilowatt-hour, an increase of 10.29% over the previous year. Therefore, the increase in electricity prices will ensure that the company's revenue side continues to grow. Considering that the annualized fluctuation in hydropower costs is small, it is expected that the company's hydropower business will continue to grow steadily throughout 2023. In addition to the excellent hydropower performance, the company added 2,432,400 kilowatts of new energy installed in 2023. Driven by the new installed capacity, the company completed wind power generation capacity of 6.494 billion kilowatt-hours throughout the year, an increase of 33.25% over the previous year, and completed photovoltaic power generation capacity of 2,953 million kilowatt-hours, an increase of 60.36% over the previous year. The rapid growth in wind power and photovoltaic power is expected to drive the company's new energy performance to also maintain excellent performance.
The amount of thermal power has increased steadily, and cost optimization dominates performance. In the fourth quarter, the company's thermal power generation capacity was 13.566 billion kilowatt-hours, up 5.12% year on year; the feed-in price was 0.471 yuan/kilowatt-hour, a decrease of 1.46% year on year. The main reason for the reduction in electricity prices was probably due to the fact that two power plants in Fujian Province, Huaxia Electric Power and Meizhouwan Electric Power participated in spot trading of electricity transmission between provinces in Fujian Province during the same period last year. The electricity price level was high, resulting in a high base effect. In fact, compared with the benchmark price for coal combustion, the feed-in electricity prices for the two power plants still rose by more than 20% in the fourth quarter. In terms of cost, the average liquidation price of Q5500 coal at Qinhuangdao Port in the fourth quarter was 957.69 yuan/ton, a year-on-year decrease of 32.98%. The steady decline in coal prices will cause thermal power costs to continue to recover. It is expected that the company's thermal power performance will continue to improve. Considering that the company's thermal power maintained excellent performance in the first three quarters, the company's annual thermal power performance is expected to grow rapidly. As a result, the company will achieve net profit of 5.723 billion yuan to 6.860 billion yuan throughout the year, an increase of 40.29% to 68.16% year on year before the retroactive adjustment; the caliber after the retroactive adjustment increased by 40.35% to 68.24% year on year. Based on this, it is estimated that the company's fourth quarter results were -329 million yuan to 808 million yuan, while last year's fourth quarter results were -47 million yuan. Considering that all of the company's business operations in the fourth quarter improved compared to last year, the company's performance may be in the upper half of the forecast range.
Investment advice: According to the latest operating data, we have adjusted the company's profit forecast. It is estimated that the company's corresponding EPS for 2023-2025 will be 0.87 yuan, 1.06 yuan, and 1.15 yuan, respectively, and the corresponding PE will be 15.35 times, 12.63 times, and 11.59 times, respectively, maintaining a “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.