Event: On January 20, 2024, the company announced the 2023 Annual Results Report. From January to December 2023, the company achieved total revenue of 26.451 billion yuan, up 11.08% year on year (after adjustment); realized net profit of 7.346 billion yuan, up 4.50% year on year; basic earnings per share of 0.2566 yuan, up 4.44% year on year; weighted average ROE was 9.22%, a decrease of 0.34 pct from the same period last year.
In the fourth quarter of 2023, the company achieved total revenue of 7.162 billion yuan, an increase of 11.8% over the previous year; net profit to mother was 1.91 billion yuan, an increase of 93.8% over the previous year.
Power generation and operating income increased, and profitability declined. In 2023, the company's power generation capacity was 55.179 billion kilowatt-hours, up 14.12% year on year, 2023Q4 power generation increased 16.19% year on year in a single quarter, and many projects were put into operation in the fourth quarter, driving an increase in power generation. In 2023, the company's total revenue increased 11.08% year on year, and operating profit increased 0.34%. The reason for the decline in profitability was that during the trial operation of the new production project, revenue fell a lot year on year; the installed equipment put into production was converted one after another, depreciation and amortization, operating costs and production safety expenses increased; and investment income declined year on year.
New energy projects are rich in reserves, and offshore wind power development is far ahead. From January to September 2023, the company added 2.97 GW of grid-connected installed capacity. Due to the concentrated construction window for new energy projects, the overall production scale was low and high, and concentrated growth in the fourth quarter. It is expected that the new installed capacity will exceed 13 GW throughout the year, and the total installed capacity will exceed 40 GW. At the same time, the company's projects under construction exceed 10 million kilowatts, which can provide strong support for the “14th Five-Year Plan” installed capacity growth. The company actively promotes the development of onshore wind power and photovoltaic power generation at large bases. The project has advantages in scale and centralized delivery and consumption.
In terms of offshore wind power, as of 2023H1, the company has installed a total of 4.9462 million kilowatts of offshore wind power, accounting for 15.72% of the national market share. The 111 MW offshore wind power project in Pingtan, Fujian was put into operation in the second half of the year.
Since existing offshore wind power projects are concentrated in production in 2021, feed-in tariffs are subject to subsidized electricity price standards; incremental projects are concentrated in regions with high-quality wind resources and high electricity consumption levels in Fujian and Guangdong, while benefiting from upstream wind power manufacturing in a cost reduction cycle, incremental projects will still have a good level of yield.
Investment advice: The fundamentals of the green power industry are expected to rebound after bottoming out. As a leading new energy power generation company, undervaluation combined with high installed capacity growth brings room for long-term growth. The company is expected to achieve operating income of 265.45, 349.60, and 41.796 billion yuan in 2023-2025; net profit to mother of 73.49, 91.78, and 10.602 billion yuan, up 2.7%, 24.9%, and 15.5% year-on-year. The corresponding EPS is 0.26, 0.32, and 0.37 yuan, and the corresponding PE multiples are 18.9, 15.2, and 13.1X, maintaining the “gain” rating.
Risk warning: risk of wind falling short of expectations, risk of falling electricity consumption, risk of falling electricity prices due to marketization of electricity, risk of untimely payment of subsidies, risk of poor installed capacity growth, natural disasters.