The fall in earnings for 2023 was within expectations, with final interest rates rising 40% year over year. Due to the high base due to lower costs in 2022, Datang New Energy's net profit in 2023 fell 24% year on year to 2.24 billion yuan (RMB, same below), slightly lower than our forecast of 3%. After deducting the one-time impairment of about 200 million yuan announced earlier, core profit decreased by only 4.8% year over year. Operating profit for 2023 was slightly lower than our forecast of 3%, mainly due to an increase of around 30% in operating expenses other than impairment items. The company's final interest rate increased sharply by 40% to 7 points, and the dividend payout ratio increased by 10% to 23%.
There are plenty of projects under construction, and it is still expected that the installed capacity target will be achieved in 2024. The company added 1.2 gigawatts of installed capacity last year, with wind and light adding 0.29/0.94 gigawatts respectively, which is slightly lower than our expected 1.5 gigawatts. In particular, progress in wind power installations is slower than expected. Management still expects more than 2 gigawatts of installed capacity to be added in 2024.
We believe it is still expected to be completed on top of the 1.8 GW project under construction by the company. At the same time, management said it is still possible to acquire some of the parent company's approximately 10 gigawatt renewable energy installations, but there is currently no firm timeline. We currently conservatively expect the company to add 1.8/2.1 GW of self-built wind and light projects by the end of 2024/25.
Profit forecasts were lowered to reflect more conservative feed-in price/utilization hour expectations. Considering that the company's installed capacity fell short of expectations last year, and that PV feed-in prices/usage hours were still slightly lower this year on year, we lowered our earnings forecast per share for 2024/25 by 6.2%/5.6%. Based on the net profit in the statement, the company's compound profit growth in 2023-26 reached 7.7%. We continued to base our valuation on the average annual earnings ratio over the past 5 years (5.7 times), and the target price was lowered to HK$2.0 (previously HK$2.2). Maintain a buy rating.
Valuation discounts reflect poor execution expectations, and it will be easier to verify whether self-built projects can be accelerated. We understand that factors such as the company's declining profits last year, insufficient execution of new installations, and the conservative attitude of acquisition projects are still worrying investors for the next 6 months, but the current valuation is already at a low level for the past two years (about 1 standard deviation below the 5-year average). We believe that the discount already broadly reflects the gap between the company's actual execution and investors' expectations. Based on comprehensive analysis, we believe that acquisitions often require equity financing and are more difficult. Currently, the progress of the company's new self-construction projects is probably better than last year; this should be verified in the interim report more quickly.