Event: The company released its 2023 annual results forecast. The net profit for the full year of 2023 is expected to be between 800 million yuan and 1.2 billion yuan, turning a year-on-year loss into a profit. The company achieved year-on-year growth in feed-in power for all major power supply types, a sharp increase in operating income, and a sharp rise in electricity capacity and installed capacity. The green transformation is beginning to bear fruit. Prices in the coal market have declined, and marginal revenue from the coal power business has improved.
Electricity and installed capacity have risen sharply throughout the year, and cost improvement and profitability have continued to increase. In terms of electricity capacity, the company's cumulative power generation capacity in 2023 was 1205.53 kilowatt-hours, an increase of 5.7% over the previous year; the feed-in electricity volume was 113,998 billion kilowatt-hours, an increase of 5.88% over the previous year. Among them, coal/gas/wind power/hydropower/biomass/photovoltaic power generation were 956.39/185.11/4.11/7.08/382 million kilowatt-hours respectively, with year-on-year changes of +2.15%/+23.09%/+14.05%/+9.31%/-0.14%, respectively (0.3 billion kilowatt-hours of PV in the previous period). Q4 In a single quarter, due to seasonal changes in electricity supply and demand and the acceleration of new energy construction, coal/hydropower generation declined month-on-month, and wind power generation increased month-on-month. In terms of installed capacity, the company added a total of 2.43 million kilowatts of installed capacity in 2023. Through self-construction and acquisition, 3.09 million kilowatts of installed capacity were added, including 667,000 kilowatts of gas and electricity, 450,000 kilowatts of wind power, 1.973 million kilowatts of photovoltaic power generation, and 660,000 kilowatts of coal mills were shut down. In terms of cost, coal prices in the 2023 market fell significantly compared to the price center of the previous year. Costs continued to improve, and the company's profitability increased markedly.
The risk of electricity prices in Guangdong has been released, and performance is under pressure, waiting to blossom. The average annual electricity transaction price in Guangdong in 2024 was 465.62 percent per kilowatt-hour, down 15.93% from the average transaction price of 553.86 percent per kilowatt-hour in 2023. On the basis of considering additional increases in coal-capacity electricity prices, the comprehensive electricity price level is still significantly lower than in 2023, but we expect that the electricity price risk has been fully released. On the cost side, the current market price of 5,500k coal in Beigang is less than 920 yuan/ton, which is a marked drop from the same period last year. It is expected that the price of working coal will be under pressure, and there is still plenty of room for flexibility in improving the company's costs. After the market has fully responded to the risk, wait for the company to reverse.
Investment advice. Since the average annual electricity transaction price in Guangdong Province in 2024 fell short of expectations, down 15.93% from the previous year's electricity price, which directly affected the company's performance, the performance forecast was revised. The company's revenue for 2023-2025 is estimated to be 595/599/67.4 billion yuan respectively, up 13.1%/0.6%/12.5% year-on-year; net profit to mother was 12.55/18.88/3,019 billion yuan, corresponding to 2023-2025 EPS of 0.24/0.36/0.58 yuan, respectively, and 21.5/14.3/8.9 for 2023-2025 PE, respectively. The company still has resource advantages and profit recovery flexibility, and maintains a “buy” rating.
Risk warning: power supply installation speed falls short of expectations; risk of electricity price reduction; price increase of upstream raw materials.