Introduction to this report:
Factors such as depreciation in 4Q23 dragged down performance. Coal and electricity turned month-on-month losses, and new energy installations are expected to accelerate as capital expenditure accelerates.
Key points of investment:
Maintain the “gain” rating: Taking into account factors such as the decline in the company's new energy electricity prices, the 2023-2024 EPS was lowered to 0.81/0.87 yuan (originally 0.82/0.90 yuan), and the 2025 EPS was given 0.96 yuan. Maintain the target price of 10.66 yuan and maintain the “Overweight” rating.
The 4Q23 results were in line with expectations. The company's revenue for 2023 was 254.4 billion yuan, +3.1% year on year; net profit to mother was 8.45 billion yuan, reversing losses year on year; 4Q23 revenue was 63.1 billion yuan, +0.5% year on year, and net profit to mother was 4.12 billion yuan, up 670 million yuan year on year, in line with performance forecast expectations. The company plans to pay a dividend of 0.2 yuan per share in 2023, accounting for 57.1% of net profit attributable to common shareholders.
Factors such as depreciation dragged down performance, and coal and electricity turned month-on-month losses. The company's 4Q23 gross profit margin was 9.9%, +5.3 ppts year over year and -4.6 ppts month over month. The company's total profit for 4Q23 coal and electricity was 300 million yuan, a year-on-year loss of 2.41 billion yuan, and a month-on-month loss. We estimate that the month-on-month decline in the company's 4Q23 performance is mainly due to: 1) the company's 4Q23 accrued asset impairment of 2.89 billion yuan, mainly fixed assets and goodwill impairment of coal power units in Shandong, Liaoning, Anhui, etc.; 2) the company paid 1.31 billion yuan in income tax in 4Q23, +47.6% year-on-year; 3) the month-on-month increase in fuel costs. Considering changes in price factors, we expect the company's 1Q24E domestic coal and electricity division's profit to recover to the 2~3Q23 level.
Capital expenditure is accelerating, and the installed growth of new energy is expected to accelerate. The total profit of the company's 4Q23 New Energy Division was 1.44 billion yuan, -25.3% year-on-year, mainly affected by factors such as falling wind power prices. We expect the future growth of the company's new energy installations, supported by high capital expenditure: the company's new energy capital expenditure in 2023 is 49 billion yuan, +89.7% compared to the previous plan; the company plans to spend 64.9 billion yuan on new energy capital in 2024, which is +32.4% compared to the actual value in 2023.
Risk warning: New energy installations fall short of expectations, coal prices exceed expectations, large deductions, etc.