Net profit from 2023Q4 deducted from mother fell slightly short of expectations, and high-priced thermal power orders are expected to be delivered one after another in 2024
Dongfang Electric released its 2023 annual report. In 2023, the company achieved operating income of 60.68 billion yuan, yoy +9.6%, realized net profit of 3.55 billion yuan, yoy +24.2%, and realized net profit of 2.58 billion yuan without return to mother, yoy +8.0%.
Among them, 2023Q4 achieved revenue of 15.91 billion yuan, yoy +7.4%, and QOQ +7.1%. Net profit attributable to mother was 640 million yuan, yoy +78.4%, QOQ -29.8%, net profit deducted from non-return mother - 113 million yuan, yoy -145.9%, mainly due to increased industry competition and declining profitability. The gross margin/net margin was 17.1%/3.9%, respectively, down 0.3 pct and 2.6 pct month-on-month, respectively. Single Q4 achieved other income of 310 million yuan. This means that the company enjoyed the advanced manufacturing industry input tax credit policy and achieved a net investment income of 520 million yuan during the quarter, mainly due to disposal of the increase in shares in Sichuan Energy Investment in the same year. The company's 2024-2025 net profit is estimated to be 42.59/5,052 billion yuan (the original 2024-2025 net profit was 51.82/6.215 billion yuan respectively), adding 5.075 billion yuan to the mother's net profit in 2026, and the reduction is mainly due to the relatively weak profitability of the company's wind power business. The company's 2024-2026 EPS is expected to be 1.37/1.62/1.63 yuan, corresponding to the current stock price PE of 11.5, 9.7, 9.7. Considering the continued increase in the size of its new orders, Thermal Power High-priced orders are delivered, maintaining a “buy” rating.
New orders are growing steadily, and multi-sector revenue continues to grow year on year. According to the company announcement, the company achieved new orders of 86.532 billion yuan in 2023, an increase of 31.95% year on year. Among them, orders for high-efficiency clean energy equipment were added at 34.13 billion yuan, yoy +57.4%, mainly continuous tenders for thermal power projects. The new energy equipment business added 20.2 billion yuan in orders, yoy +12.9%. Engineering and trade added 11.66 billion yuan in orders, yoy +37.2%. Modern manufacturing services added 9.21 billion yuan in orders, yoy +14.8%. New growth businesses added 11.40 billion yuan in orders, yoy +19.4%.
By business, the company's coal power equipment business achieved operating income of 13.09 billion yuan in 2023, yoy +28.7%, gross margin of 23.4%, yoy+0.8 pct. The successive deliveries of high-priced thermal power order equipment provided support for the company's increased profitability. It is expected that the company's thermal power revenue and profitability will continue to rise in 2024. The wind power business achieved revenue of 10.84 billion yuan, yoy -11.1%, gross margin of 9.9%, yoy-2pct. Affected by increased competition in the industry, the overall loss of the wind power business is relatively serious. Considering that the company continues to increase investment in wind farm resources and increase the proportion of ocean wind shipments, its profitability will recover somewhat. Furthermore, the company's nuclear power, combustion engine and other businesses all achieved steady growth. The combustion engine achieved revenue of 3.79 billion yuan, yoy +107%, and the nuclear power business achieved revenue of 2.90 billion yuan, yoy +41.1%.
Risk warning: Power investment and construction fall short of expectations; order delivery falls short of expectations.