occurrences

The company announced its 2023 results, achieving full year operating income of 44.262 billion yuan, up 1.31% year on year; profit attributable to equity holders of 3.084 billion yuan, up 16.48% year on year; profit attributable to common shareholders of 2,660 billion yuan, an increase of 7.23% year on year.

Fuel costs have declined, and thermal power profits have recovered significantly

Revenue side: Affected by the sale of some assets at the end of '22, the company sold 54.987 billion kilowatt-hours of electricity in 2023, a year-on-year decrease of 18.97%. However, the level of coal power generation in stock increased. The number of hours used per year reached 5,246 hours, an increase of 563 hours over the previous year. Cost side: Under the dual effects of falling coal prices and the high long-term coordination ratio, the company's fuel costs were significantly reduced. The average annual unit fuel cost was 285.51 yuan/MWh, a year-on-year decrease of 12.46%. The company achieved a net profit of 1,315 billion yuan in the thermal power sector in 2023, turning a loss into a profit, corresponding to a profit of about 0.023 yuan/kWh.

The rapid expansion of the installed scale of new energy sources contributed to the growth of performance. In 2023, the company completed the acquisition of a series of clean energy project companies under China Power Investment Group and its subsidiaries, including a total installed capacity of 9.137,800 kilowatts, of which 3.7 million kilowatts of wind power were installed and 5.2997 million kilowatts of photovoltaic power generation. The above projects were consolidated in October 23, contributing about 237 million yuan in net profit. The company built its own power plants and acquired assets, and the scale of its new energy installed capacity expanded rapidly, continuing to contribute new growth impetus to the company. By the end of 2023, its consolidated clean energy installed capacity reached 339.388 million kilowatts, accounting for about 75.39%, an increase of about 10.45 pcts over the previous year.

According to our calculations, by the end of 23, the company's installed wind power capacity exceeded 27 million kilowatts, an increase of nearly 90% over the previous year. In 2023, it sold 18.497 billion kilowatt-hours of wind power, an increase of 69.23% over the previous year, and completed sales of 14.607 billion kilowatt-hours of photovoltaic power generation, an increase of 49.43% over the previous year.

With the rapid expansion of the installed scale of Scenery, the new energy sector has become the main driving force for the company's performance growth.

In 2023, the company's wind power sector achieved net profit of 3.116 billion yuan, an increase of about 82.50% year on year. The photovoltaic power generation sector achieved net profit of 1,504 billion yuan, an increase of about 46.91% year on year, and the new energy sector contributed about 101.90% of net profit. The company plans to account for more than 90% of the installed capacity of clean energy by 2025. Compared with the current installed capacity, there is still a lot of room for growth. Relying on shareholder resources and thermal power plant advantages, the company is expected to accelerate the achievement of development goals, thereby contributing to the company's continuous growth momentum.

Pressure on the hydropower sector affects performance, and profits are expected to recover this year

Rainfall in the watershed where the company's hydropower plant is located decreased year-on-year, leading to a significant decline in hydropower consumption. The number of hours used for hydropower in 2023 was 2,166 hours, a year-on-year decline of 1205 hours. The total sales volume of electricity was 11.711 billion kilowatt-hours, a year-on-year decrease of 35.49%. Under such circumstances, the hydropower sector's performance was under significant pressure, achieving net profit of 826 million yuan for the year, and was in a state of loss. Looking ahead to this year, the company completed sales of 912 million kilowatt-hours of electricity in January, an increase of 36.90% over the previous year, showing a clear recovery trend. If the hydropower sector is repaired, it is expected to drive an increase in the company's overall performance.

Profit forecasting and valuation

Considering the profit status of the company's stock assets and the growth rate of new energy installed equipment, we adjusted the profit forecast (the original forecast values were net profit of 64.09 billion yuan and 8.426 billion yuan respectively in 24-25). The net profit to the mother is expected to be 51.12 billion yuan and 6.526 billion yuan respectively in 2024-2025, up 92.14% and 27.66%, respectively. It is expected to maintain a high growth rate. The corresponding PE is 7.02 and 5.50 times, respectively, to maintain a “buy” rating.

Risk warning: macroeconomic downturn risk, coal price fluctuation risk, electricity price fluctuation risk, risk of incoming water falling short of expectations, risk of asset injection progress falling short of expectations, expansion of installed capacity of new energy sources falling short of expectations, risk of falling short of expected risk of energy consumption falling short of expected risk, wind speed falling short of expected risk, etc.