Maintain the “gain” rating: Considering the decline in new energy electricity prices, the 2024-2025 EPS will be lowered to 0.95/1.13 yuan (originally 1.13/1.29 yuan), and the 2026 EPS will be given 1.28 yuan. Based on the PE valuation situation of comparable companies, considering the leading premium, the company was given a 19x PE valuation in 2025, and the target price was lowered to 21.5 yuan to maintain the “gain” rating.
The results fell short of our expectations. The company's revenue in 2023 was 37.6 billion yuan, -5.6% year on year; net profit to mother was 6.25 billion yuan, +22.2% year over year. The performance was lower than our expectations, mainly related to the impairment of large assets calculated at the end of the year. On a quarterly basis, 4Q23 revenue was 9.54 billion yuan, -1.1% year-on-year; net profit to mother was 140 million yuan, reversing year-on-year losses.
The reversal of 4Q23 results is related to minority shareholders' sharing of losses. In 2023, the company added 4.5GW of installed capacity, including 1.6/2.9 GW of wind power/photovoltaics. 4Q23 power generation capacity was 20.7 billion kilowatt-hours, +8.0% year on year; gross profit margin was 31.1%, the same year on year; net profit -303 million yuan, up loss of 80 million yuan year on year. We believe that the reversal of 4Q23's results is mainly related to the low base for the same period last year and minority shareholders' loss sharing: 4Q23 minority shareholders' profit and loss - $440 million (4Q22 was $0.2 billion).
The dividend ratio has increased, and there is plenty of room for long-term growth. In 2023, the company plans to pay dividends (including repurchases and other methods) of 1.92 billion yuan, accounting for 30.7% of net profit attributable to mother, +11.5 ppts year on year; it plans to distribute dividends of 0.22 yuan/share, +0.1 yuan/share year over year. In 2023, the company estimated asset impairment of 2.09 billion yuan. We speculate that it is related to the renovation of old fans. Along with the gradual advancement of “big generation to small”, compounded by rich project reserves (54 GW of additional resources in 2023, 23 GW of development targets obtained), we believe that the company has broad scope for long-term growth.
Risk warning: New energy installations are lower than expected, electricity prices are below expectations, etc.