Event: The company released its 2023 annual report. The company achieved revenue of 254.4 billion yuan in 2023, 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.
Comment:
Volume increases and prices are steadily compounded by declining costs, and the company's coal and electricity losses are turned into profits
On the revenue side, the feed-in electricity price for the company's coal machine in 2023 was 491.76 yuan/megawatt-hour, which was basically the same; the coal machine was used for 4,388 hours, an increase of 160 hours over the previous year, driving a 3.32% year-on-year increase in coal engine power generation to 401 billion kilowatt-hours. On the cost side, the company's average coal purchase price in 2023 (including transportation costs and other taxes) decreased by 115.78 yuan/ton year on year; 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. Taken together, the company achieved pre-tax profit of 433 million yuan for the whole year, turning a loss into a profit over the previous year. Overseas, the company's Singapore business achieved pre-tax profit of 4.355 billion yuan in 2023, an increase of 2,477 billion yuan over the previous year.
Accelerate the low-carbon transformation of green electricity, and scenery contributes 8 billion dollars in profit before tax
The company gave full play to the advantages of “two joint ventures” and accelerated the pace of green and low-carbon transformation. In 2023, the company added 2 GW of controllable installed capacity of grid-connected wind power and 6.8 GW of solar energy. By the end of 2023, the company's wind power installed capacity was 15.5 GW and solar power generation was 13.1 GW. In 2023, the company's profit before wind power was 5.913 billion yuan, a year-on-year decrease of 322 million yuan. It was mainly affected by factors such as an increase in affordable wind power projects and increased market operating costs such as peak and frequency modulation of power systems, which led to a year-on-year decline in wind power prices.
The company's solar installations grew rapidly, achieving pre-tax profit of 2,044 billion yuan in 2023, an increase of 896 million yuan over the previous year.
The profitability of thermal power may continue to improve, and the contribution of new energy performance is expected to accelerate the increase in the price of coal power to two electricity systems, and the price mechanism will gradually improve. Looking at 2024, we expect that annual long-term cooperative electricity prices in most provinces will maintain a high upward ratio. On the cost side, coal prices are still expected to remain at a low level. Overall, the company's thermal power profitability is still expected to improve further. At the same time, the company is speeding up the construction of scenery. The capital expenditure of scenery is expected to reach 64.9 billion yuan in 2024, an increase of 32% over 2023, and the contribution of new energy sources to performance is expected to further increase. In addition, the company plans to pay a cash dividend of RMB 0.20 (tax included) per share, and the company's cash dividend ratio in 2023 is 57.14%.
Investment advice:
Taking into account the company's annual results and changes in coal and electricity prices, the profit forecast for 2024-2025 was lowered. The company's net profit for 2024-2026 is estimated to be 140, 166, 19.3 billion yuan (the previous value of 2024-2025 was 174.7 billion yuan and 19.16 billion yuan), corresponding to 10.4, 8.8, and 7.5 times PE, maintaining a “buy” rating.
Risk warning: the risk of a sharp decline in the macroeconomy, the risk of a sharp rise in coal prices, the risk of lower electricity prices, lower downstream demand than expected, the risk of excessive industry competition, the risk of continuing delays in subsidies, etc.