Key points of investment
Incident: 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; achieved net profit of 8.446 billion yuan, an increase of 214.33% over the previous year;
The amount of feed-in electricity is growing steadily, and the reduction in costs enhances profitability. In 2023, the company achieved operating income of 254.397 billion yuan, an increase of 3.11% over the previous year; achieved net profit of 8.446 billion yuan, an increase of 214.33% over the previous year, after deducting net profit of 5.611 billion yuan, an increase of 159.56% over the previous year. The increase in revenue was mainly due to the company's completion of 447.86 billion kilowatt-hours of domestic feed-in electricity in 2023, +5.3% year-on-year; at the same time, thanks to the decline in fuel costs, the company's fuel procurement expenses in 23 were 156.57 billion yuan, down 8.2% from '22, and the company's gross margin reached 12.1%, up 9.1 pct from 2022. Looking at a single quarter, 23Q4 achieved revenue of 63,075 billion yuan, net profit attributable to mother of 4.118 billion yuan, and net profit of non-return to mother of 3.784 billion yuan.
The company plans to pay a dividend of 0.2 yuan (tax included) per share in 2023, for a total cash dividend of 3.137 billion yuan.
Domestic combustion turned a loss into a profit, and overseas business performed well. In 2023, the company's domestic coal and electricity business achieved a total profit of 433 million yuan, a loss of 17.325 billion yuan in the same period last year, and a power profit of 0.001 yuan/kwh, an increase of 0.049 yuan/kwh over the same period last year. Mainly due to a sharp drop in coal prices, in 2023, the company's average coal purchase price (including transportation costs and other taxes) decreased by 115.78 yuan/ton year on year, and the fuel cost per unit of electricity sold by domestic thermal power plants was 326.43 yuan/megawatt-hour, down 12.38% year on year. In terms of ancillary service revenue, the company's net revenue for peak-shifting/FM auxiliary services was 22.23/495 billion yuan respectively in 2023. It is expected that with the advancement of capacity electricity prices and ancillary service market mechanisms, the profit stability of the company's coal and electricity sector will further improve. In terms of overseas business, the Singapore business achieved pre-tax profit of 4.355 billion yuan in '23, an increase of 2,477 billion yuan over the previous year, while the Pakistan business achieved a total profit of 605 million yuan, an increase of 209 million yuan over the previous year.
The installed scale of Scenery is growing rapidly, and it is expected that it will continue to grow at a high rate. By the end of 2023, the installed capacity of the company's controllable power generation was 135.66 GW, of which low-carbon clean energy accounted for 31.24%. In 2023, the company added 10 GW of grid-connected controllable power generation capacity, including 2.03 GW of installed capacity of wind power and 6.83 GW of installed capacity of solar power, accounting for a total of 88.55%. Affected by factors such as the increase in affordable wind power projects and the undertaking of power system peak frequency modulation, the profit before wind power was 5.913 billion yuan, a year-on-year decrease of 322 million yuan; the profit before tax for solar power generation was 2,044 billion yuan, an increase of 896 million yuan over the previous year. As the upstream prices of photovoltaics and wind power fall, we expect the construction costs of the company's new energy projects to decrease and the construction speed to accelerate.
Investment advice and valuation: We expect the company's 2024-2026 revenue to be 257.08 billion yuan, 263.54 billion yuan, and 268.66 billion yuan respectively, with growth rates of 1.1%, 2.5% and 1.9% respectively, and net profit to mother of 13.54 billion yuan, 14.74 billion yuan and 16.42 billion yuan respectively. Growth rates are 60.4%, 8.8%, and 11.4% respectively, maintaining the “increase in holdings” ratings.
Risk warning: risk of fluctuations in coal prices, risk of electricity price reduction, new wind power and photovoltaic installations falling short of expectations, etc.