Core views
In 2023, the company achieved cumulative revenue of 254.397 billion yuan, an increase of 3.11% over the previous year; achieved net profit of 8.446 billion yuan, turning a year-on-year loss into a profit. The reversal in the company's performance was mainly due to a year-on-year decline in fuel costs and a year-on-year increase in electricity volume for domestic business units, as well as a sharp year-on-year increase in the company's profit in Singapore. By sector, the total cumulative profits of domestic coal, combustion engines, wind power, photovoltaics, and hydropower in 2023 were 433 million yuan, 777 million yuan, 5.913 billion yuan, 2,044 billion yuan, and 0.17 billion yuan, respectively. The same period last year was -17.325 billion yuan, 575 million yuan, 6.235 billion yuan, 1,148 million yuan, and 222 million yuan. In 2023, the total amount of feed-in electricity in the company was 447.856 billion kilowatt-hours, an increase of 5.33% over the previous year, and an increase of 10.230 billion yuan. We expect the company's net profit to be 14.716 billion yuan, 16.191 billion yuan, and 17.654 billion yuan respectively from 2024 to 2026, maintaining the “buy” rating.
occurrences
The company released its 2023 annual report
The company achieved operating income of 254.397 billion yuan for the full year of 2023, an increase of 3.11% over the previous year; achieved net profit of 9.082 billion yuan, compared to -10.085 billion yuan in the same period last year; realized net profit of 8.446 billion yuan, compared to -7.387 billion yuan in the same period last year. In 2023, the company's weighted average ROE was 11.25%, up 29.75 percentage points from the previous year; EPS was 0.35 yuan/share, compared to -0.61 yuan/share in the same period last year.
Brief review
The annual results turned a loss into a profit, and the investment income from the transfer of the Sichuan company increased significantly. In 2023, the company achieved cumulative revenue of 254.397 billion yuan, an increase of 3.11% over the previous year; realized net profit of 8.446 billion yuan, turning a loss into a profit over the previous year. The reversal in the company's performance was mainly due to a year-on-year decline in fuel costs and a year-on-year increase in electricity volume for domestic business units, as well as a sharp year-on-year increase in the company's profit in Singapore. By sector, the total cumulative profits of domestic coal, combustion engines, wind power, photovoltaics, and hydropower in 2023 were 433 million yuan, 777 million yuan, 5.913 billion yuan, 2,044 billion yuan, and 0.17 billion yuan, respectively. The same period last year was -17.325 billion yuan, 575 million yuan, 6.235 billion yuan, 1,148 million yuan, and 222 million yuan. The company's domestic thermal power improvement is mainly due to the decline in coal prices compounded by the increase in the proportion of coal-related coals, a decrease in domestic fuel costs, and a year-on-year increase in thermal power generation. The sharp increase in the company's profit in Singapore is mainly due to the tight supply and demand situation of electricity in Singapore. Combined, electricity prices are fully marketed, and Dashi Energy's electricity prices have increased significantly. In addition, Huaneng International transferred 49% of the shares of Sichuan Energy Development Company to Huaneng Hydropower, with a transaction consideration of 8.579 billion yuan. The transaction resulted in a significant year-on-year increase in the company's investment income. In 2023, the company's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.09%, 2.53%, 0.60%, and 3.49%, respectively, accounting for asset impairment losses of 2,972 billion yuan.
The coal power sector turned a loss into a profit. The year-on-year decline in wind power and hydropower profits. Looking at the 2023 situation, the total profits of domestic coal, combustion engines, wind power, photovoltaics, and hydropower were 433 million yuan, 777 million yuan, 5.913 billion yuan, 2,044 billion yuan, and 0.17 billion yuan respectively. In the same period last year, they were -17.325 billion yuan, 575 million yuan, 6.235 billion yuan, 1,148 million yuan, and 022 million yuan, respectively, +102.50%, +35.08%, -5.16%, +78.08%, - 25.37%, +61.41% In 2023, the increase in the electricity consumption of the whole society led to a year-on-year increase in the company's power generation. Affected by factors such as the reduction in hydropower generation across the country, widespread continuous high temperatures and cold tide weather, the company's thermal power played a peak supply guarantee, support and regulation role during peak summer and winter heating periods, and thermal power generation increased year-on-year. The total profit of wind power before tax for the year was 5.913 billion yuan, a year-on-year decrease of 322 million yuan, mainly due to the year-on-year decline in wind power prices. The reasons for the decline mainly include factors such as an increase in affordable wind power projects and increased market operating costs such as power system peak shifting and frequency modulation. The decline in hydropower profits is mainly due to a reduction in hydropower generation across the country.
The amount of feed-in electricity increased steadily, and the average electricity price declined year-on-year. Maintaining the “purchase” rating in 2023, the total amount of feed-in electricity in the company was 447.856 billion kilowatt-hours, an increase of 5.33% over the previous year, and an increase of 10.230 billion yuan. Specifically, in 2023, the company's feed-in electricity volumes for coal power, gas engines, wind power, photovoltaics, and hydropower were 375.804 billion kilowatt-hours, 27.706 billion kilowatt-hours, 31,835 billion kilowatt-hours, 10.911 billion kilowatt-hours, and 748 million kilowatt-hours, with year-on-year changes of +3.27%, +5.15%, +16.14%, +81.67%, and -7.53%, respectively. In 2023, the average domestic electricity price of the company was 508.74 yuan/megawatt-hour, a year-on-year decrease of 0.23%. In terms of installed capacity, in 2023, the company added an installed capacity of 10.39 million kilowatts of grid-connected thermal power generation, including 1.145 million kilowatts of controllable power generation capacity of grid-connected thermal power plants, 2,033,200 kilowatts of controlled wind turbines, and 6.8257 million kilowatts of solar controlled power generation.
From 2024 to 2026, we expect the company's operating income to be 270.3 billion yuan, 273.4 billion yuan, and 276.5 billion yuan respectively, with corresponding net profit attributable to mother of 14.716 billion yuan, 16.191 billion yuan, and 17.654 billion yuan respectively, and corresponding net profit attributable to common shareholders of 13.141 billion yuan, 14.616 billion yuan, and 16.079 billion yuan, respectively, maintaining the “buy” rating.