Description of the event

The company released its 2023 performance forecast: In 2023, the company is expected to achieve net profit of 800 to 1.2 billion yuan, turning a loss into a profit compared to a loss of 2,980 billion yuan in the same period last year.

Incident comments

Electricity consumption has maintained steady growth, and revenue expectations are steady. In the fourth quarter of 2023, the company completed feed-in power of 27.542 billion kilowatt-hours, an increase of 3.44% over the previous year. Among them, coal machines completed feed-in power of 21,835 billion kilowatt-hours, an increase of 1.22% over the previous year. Since units 4 and 5 of Shajiao A Power Plant were shut down at the end of service in October 2023, this means that the number of hours used by the company's existing coal machines may increase significantly. Furthermore, although the company added 667,000 kilowatts of gas and electricity installations in 2023, production was already put into operation on December 28, which had limited impact on current electricity capacity and performance. However, the company's gas and electricity still completed feed-in power of 3.76 billion kilowatt-hours, an increase of 6.37% year on year, mainly due to the company's new 920,000 kilowatt-hours of installed gas and electricity in 2022; in the fourth quarter, the company's wind power completed feed-in power generation of 1,461 million kilowatt-hours, an increase of 14.88% year on year; hydropower completed 113 million kilowatt-hours of feed-in power, up 39.54% year on year; biomass completed feed-in power of 168 million kilowatt-hours, a year-on-year decrease of 9.39%; photovoltaics completed feed-in capacity of 206 million kilowatt-hours, compared with the same period last year There was a sharp increase of 0.03 billion kilowatt-hours, and the rapid growth in new energy power was mainly due to the expansion of scale. In 2023, the company added 450,000 kilowatts of wind power and 1.973 million kilowatts of photovoltaics. Driven by a steady increase in electricity volume in the fourth quarter, the company achieved 113,998 billion kilowatt-hours of feed-in electricity for the full year of 2023, an increase of 5.88% over the previous year. Therefore, overall, the company's revenue is expected to maintain steady growth in the fourth quarter and the full year of 2023, driven by a steady increase in electricity volume combined with a year-on-year increase in thermal power prices.

Costs are expected to continue to be repaired, and multi-factor resonance limits performance. 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%. Although the performance of the company's new gas and electricity installations is expected to be limited by higher gas prices, profits may be under some pressure. However, due to the high year-on-year decline in coal prices and the year-on-year increase in electricity prices, it is expected that thermal power's operating performance in the fourth quarter will still maintain a high year-on-year increase. Furthermore, considering the steady performance of the new energy business, the operating performance of the new energy business in the fourth quarter is also expected to maintain a year-on-year increase. However, the company revealed that it achieved net profit of 8-12 billion yuan for the full year of 2023, with a loss of 927 million yuan to 527 million yuan in the fourth quarter, an improvement from the loss of 1,284 million yuan in the fourth quarter of last year. If we consider the depreciation of 174 million yuan in the fourth quarter of last year, the recovery in the company's performance was weak, and the net profit from the third quarter fell by 870 million yuan from the third quarter. Although there was an impact of the month-on-month increase in coal prices in the fourth quarter, we also believe that the weak operating performance may be: 1) the company's non-recurring profit and loss reached -134 million yuan in the fourth quarter, which limited the company's performance recovery to a certain extent; 2) Shanxi Guangdong Electric Energy, which uses coal as the main source of performance, contributed 526 million yuan in investment income in 2022, accounting for 50% of the company's investment income. As coal prices fall year-on-year, it is expected that the contribution of investment income in the fourth quarter may narrow; 3) The year-on-year increase in expenses during the period and impairment factors may have become an important influencing factor under the influence of the company's fourth quarter results.

Investment advice and valuation: According to the latest financial data, we adjusted the company's profit forecast. We expect the company's EPS to be 0.20 yuan, 0.41 yuan, and 0.54 yuan respectively in 2023-2025, corresponding to PE of 26.26 times 12.64 times and 9.57 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.