Description of the event
The company released its 2023 annual report: in 2023, the company achieved operating income of 254.397 billion yuan, an increase of 3.11% over the previous year; realized net profit of 8.446 billion yuan, an increase of 214.33% over the previous year.
Incident comments
Thermal power operations continued to be repaired, and performance was limited by impairment. Affected by factors such as reduced hydropower generation and widespread high temperatures across the country, the company's coal power feed-in capacity in 2023 was 375.804 billion kilowatt-hours, an increase of 3.27% over the previous year; combustion engines completed feed-in electricity consumption of 27.706 billion kilowatt-hours, an increase of 5.15% over the previous year. The company's coal-fired trading electricity price was 481.01 yuan/megawatt-hour, up 21.19% from the benchmark electricity price and 0.5% higher than the same period last year. Driven by a sharp rise in volume and price, the company's revenue from coal engines in 2023 was 18.844 billion yuan, up 2.55% year on year; combustion engine revenue was 19.076 billion yuan, up 7.86% year on year. In 2023, the domestic coal supply and demand relationship continued to improve. The fuel cost per unit of electricity sales for domestic thermal power plants was 326.43 yuan/megawatt-hour, a year-on-year decrease of 12.38%. Thanks to the company's domestic fuel costs decreased by 14.201 billion yuan over the same period last year, a decrease of 8.77%. Since the company carried out necessary impairment tests and evaluations of goodwill and assets showing signs of impairment at the end of the year, the company calculated an impairment value of 3,099 billion yuan at the merger level in 2023. The main impairment assets were thermal power assets. However, although depreciation affected performance, the company's profit in the coal machine sector in 2023 was 433 million yuan, turning a loss into a profit compared to a loss of 17.325 billion yuan last year. Of these, losses of 3.03 billion yuan were affected by impairment in the fourth quarter, but this is still a significant improvement over the loss of 5.412 billion yuan in the same period last year.
The performance of new energy sources has been improving steadily, and the repayment of excess dividends shows sincerity. At the end of 2023, the company's new energy installed capacity reached 28.611 million kilowatts, an increase of 43.74% over the previous year. Driven by the high increase in installed capacity, the company's wind power feed-in capacity reached 31,835 billion kilowatt-hours, an increase of 16.14% over the previous year; PV feed-in power reached 10.911 billion kilowatt-hours, an increase of 81.67% year on year. The company's total profit before wind power was 5.913 billion yuan, a year-on-year decrease of 322 million yuan. The decline in profit was mainly due to the increase in affordable projects and the increase in power system peak-shifting tasks; the total profit of the photovoltaic business reached 2,044 billion yuan, an increase of 78.08% over the previous year.
In terms of overseas business, Dashi Energy's total profit in 2023 was 4.355 billion yuan, up 2,477 billion yuan year on year; total business profit in Pakistan was 605 million yuan, up 0.09 billion yuan year on year. In addition to the main business, the company generated disposal income of 2,006 billion yuan from the sale of hydropower in Sichuan in 2023, which drove the company's investment income to reach 2,797 billion yuan. However, the investment income for the fourth quarter was a loss of 728 million yuan, a sharp decrease from the profit of 41 million yuan in the same period last year. This was the first time in a single quarter of the year that it lost money. The company's profit reduction factors also include: non-operating income and expenditure of -244 million yuan in 2023, a decrease of 952 million yuan from the same period last year, including non-operating income and expenditure of -325 million yuan for the fourth quarter, a decrease of 772 million yuan from the same period last year, mainly due to a decrease in carbon emission rights revenue and an increase of non-current asset scrapping losses. Although the fourth quarter's results were under pressure, or affected by changes in the profit structure, income tax expenses for the single quarter were still as high as 1,307 million yuan, an increase of 420 million yuan over the previous quarter. Overall, although profit reduction factors had a certain impact on operations, driven by steady improvement in main business operations, the company achieved net profit of 8.446 billion yuan for the whole year, an increase of 214.33% over the previous year. The company plans to release a cash dividend of 0.2 yuan (tax included) per share. The cash dividend ratio for the year reached 57.14%, exceeding the dividend promise.
Investment advice: According to the company's latest financial data, we adjusted the company's profit forecast. The company's EPS for 2024-2026 is 1.04 yuan, 1.06 yuan, and 1.17 yuan respectively, corresponding to PE of 8.75 times, 8.63 times, and 7.77 times, respectively.
Maintain the company's “buy” rating.
Risk warning
1. There is a risk that electricity supply and demand will deteriorate;
2. There is an unseasonal risk in coal prices.