Incident Overview: On March 27, the company released its 2023 annual report. During the reporting period, it achieved operating income of 37.642 billion yuan, a year-on-year decrease of 5.57% (repeated); net profit to mother of 6.249 billion yuan, an increase of 22.27% over the previous year (as restated); net profit without return to mother of 6.243 billion yuan, an increase of 8.68% over the previous year (as restated).
The company plans to distribute cash dividends of 0.2225 yuan per share to all shareholders, for a total cash dividend of 1,860 billion yuan, with a cash dividend ratio of about 30.60%.
Due to cost expansion and depreciation pressure due to increased installed capacity, the main wind power industry is under pressure: in 2023, the company held 1.5626 million kilowatts of wind power, completing 61,353 billion kilowatt-hours of wind power generation, an increase of 5.2% over the previous year. Among them, Q4 wind power generation capacity was 16.68 billion kilowatt-hours, an increase of 2.8% year on year. Due to factors such as affordable projects and increased electricity traded in the market, the average feed-in electricity price for wind power in 2023 fell 2.4 points/kilowatt-hour to 0.457 yuan/kilowatt-hour, a decrease of 5.0%; the decline in electricity prices caused the company's wind power sector to achieve revenue of 27.361 billion yuan (excluding revenue from franchised services) of 27.361 billion yuan, an increase of 2.1% year on year, lower than the electricity growth rate during the same period. The expansion of installed capacity growth costs and the calculation of asset impairment losses for “big generation and small” projects led to the annual operating profit of the company's wind power sector of 11.011 billion yuan, a year-on-year decrease of 5.3%, and the operating profit margin fell 3.1 percentage points to 39.8%.
New energy squeezed thermal power generation has declined, and there is still room for decline: due to the squeezing of new energy installations in Jiangsu Province, the company's thermal power generation capacity was 10.320 billion kilowatt-hours in 2023, down 2.4% year on year; however, the annual average feed-in electricity price increased 1.7 cents/kilowatt-hour year on year to 0.417 yuan/kwh, an increase of 4.3%; annual thermal power generation revenue was 3,971 billion yuan, down 2.4% year on year; on the cost side, the company's thermal fuel costs fell 3.4% year on year. Considering the current coal price trend, thermal power performance is still there Improve space.
With sufficient reserve resources, photovoltaics continued to grow: by the end of 2023, the company's other renewable energy (mainly photovoltaics) installed capacity reached 596.43 million kilowatts, of which 2,9473 million kilowatts were added; the company's other renewable energy business (mainly photovoltaics) completed 4.553 billion kilowatt-hours of power generation, an increase of 159.8% year on year; other renewable energy businesses (mainly photovoltaics) achieved revenue of 1,408 billion yuan during the same period, an increase of 114.4% over the same period. In 2023, the company obtained a new energy development target of 19.84 GW (wind power 5.07 GW, photovoltaic 14.77 GW); added 24.65 GW of wind power resource reserves and 23.95 GW of photovoltaic resource reserves, and the restructuring of resource reserves increased the company's growth potential.
Investment advice: Due to the wind farm's “big generation to small” renovation and upgrading plan, the company continued to accrue asset impairment losses of about 2,086 billion yuan this year, which dragged down the release of performance. According to changes in electricity volume, electricity prices, and subsequent transformation arrangements, the profit forecast for the company was adjusted. It is estimated that EPS for 24/25 will be 0.95/0.99 yuan (previous value 1.08/1.11 yuan), and the corresponding closing price of PE on March 27 will be 19.1/18.4/17.9 times, respectively. The reference industry is comparable to the company's valuation level, giving the company a 24-year PE valuation of 25.0 times, and a target price of 23.75 yuan/share, maintaining a “careful recommendation” rating.
Risk warning: 1) Changes in natural conditions; 2) insufficient electricity consumption; 3) Delays in payment of subsidies.