Key points of investment

Profit in 2023 was HK$993 million, up 2.2% year over year:

In 2023, the company achieved revenue of HK$2,517 million, up 8.7% year on year; net profit attributable to shareholders was HK$993 million, up 2.2% year on year. The basic profit per share was HK12.56 HK cents, and the annual dividend was HK 6 cents. The company's revenue growth is mainly due to the increase in power generation due to the contribution of newly acquired power plants. The company sold 3,817.6 GWH of electricity during the period, up 19.6% year on year; profit increased only slightly, mainly due to increased financing costs due to rising overseas interest rates and increased income tax expenses.

The target is to acquire 700-1000MW of power plants in 2024, and the scale is growing steadily:

In 2023, the company completed the acquisition of parent company Xinyi Solar's four affordable projects with an approved capacity of 636.5 MW. As of December 31, 2023, the total approved capacity of solar power plants owned and operated by the company was 3,650.5 megawatts, of which affordable projects accounted for about 52.8%. Currently, Xinyi Solar has 1.9 GW (of which 1.4 GW is an affordable project) that the company can acquire in the future. In 2024, the company aims to acquire 700-1000MW affordable projects from Xinyi Solar and independent third parties. On February 28, 2024, the company exercised a subscription option to acquire 8 total 790MW solar power plant projects from Xinyi Solar. It is expected that the scale of the company's power plants will reach 4.35 GW by the end of 2024. The continued decline in the price of photovoltaic modules will help increase the yield of the project and support the growth of the company's power plant scale.

Maintain financial stability and increase the share of domestic financing:

Domestic bank lending began to be expanded in the first half of 2023. The interest rate on long-term bonds is less than 3%, which has a clear advantage over offshore lending rates. By the end of 2023, 13.3% of total bank loans were denominated in RMB, with a net debt ratio of 42.3%, which was significantly lower than the industry average, and the financial situation remained stable. In the future, the company will mainly use domestic bank financing to meet its capital requirements for new acquisitions and increase the share of domestic financing.

The target price is HK$1.32, giving a holding rating:

We updated the company's target price to HK$1.32, which is equivalent to 9 times and 7.6 times PE in 2024 and 2025. The target price has room to increase by 13% compared to the current price, giving it a holding rating.