Performance increased year-on-year, with dividend payout ratio as high as 61%
In 2023, the company's revenue was +1.3% YoY to $44.26 billion, and net profit attributable to mother +7.2% YoY to $2.66 billion (after deducting interest on perpetual bonds of $420 million); final dividend of 0.132 yuan/share, with a dividend ratio of 61%.
Considering that interest on perpetual bonds is deducted from net profit attributable to mother, we expect the company's net profit to be $51/66,81 billion yuan (previous value: 55/70/-) billion yuan in 2024-2026. Based on the company's 2024E net profit/thermal power to mother net profit/thermal power to mother net assets of 45.99/155.8/8.264 billion yuan, referring to comparable company Wind's consensus expectation of 2024E PE/PB/PB to be 6/0.8/2.3x, respectively, considering that the company's 14th Five-Year New Energy Development Goals are larger. The company's valuation of comparable thermal power includes new energy expectations, and hydropower profitability and power generation stability are weaker than comparable companies. /PB, after deducting perpetual debt of $15.175 billion, the company's target market value is $50.2 billion (HK$55.3 billion), and the target price is HK$4.47 (previous value: HK$4.37), “buy”.
Net profit from thermal power increased sharply year on year. Poor intake water dragged down hydropower performance due to falling coal prices and the completion of some unprofitable coal power asset listings in 2022. In 2023, the company's coal power unit fuel cost was -12.5% to 285.51 yuan/MWh, and the coal consumption for electricity supply was -1.21% YoY to 298.72g/kWh. The thermal power sector achieved a net profit of 1.32 billion yuan, compared to -1.39 billion yuan in the same period in 2022.
Due to severe depletion of incoming water from the watershed where the company's hydropower station is located, the company's hydropower feed-in electricity volume in 2023 was -35.5% to 11.71 billion kilowatt-hours. Even though the feed-in price without tax for hydropower was +1% to 260.68 yuan/MWh, the profit from hydropower to mother in 2023 fell sharply by 396% year on year to -530 million yuan. If incoming water improves, there is plenty of room to recover profits in the company's hydropower sector.
4.8/7.9GW of wind power/photovoltaic installations were added in 2023, and clean energy accounts for 75.4% of the installed capacity at the end of 2023. By the end of 2023, the company's wind/photovoltaic installed capacity reached 12.0/15.1GW, and 4.8/7.9GW was added during the year, of which 3.7/5.3 GW came from acquisitions. The company's acquisition of the 9.1GW clean energy asset package already in production in 2023 was merged into the company's statements in October 2023, contributing 240 million yuan to the company's net profit. The asset package will still contribute to the company's net profit growth in 2024. In 2023, the company achieved feed-in capacity of 185/14.6 billion kilowatt-hours, +69.2%/+49.4%; however, due to new affordable projects, the company's average tax-free feed-in price in 2023 was -1.5%/-6.3% to 471.41/411.56 yuan/MWh; in 2023, the net profit contribution of the company's wind power/PV to mother was 2,22/999 million yuan, respectively, +65%/+28%.
Target price of HK$4.47, maintaining “Buy” rating
The company's net profit for 2024-2026 is estimated to be $51/668.1 billion, and the company's target market value is HK$55.3 billion, corresponding to the target price of HK$4.47, maintaining a “buy” rating.
Risk warning: Feed-in electricity prices/new energy development/incoming water/hours of use fell short of expectations, coal prices exceeded expectations