Description of the event
The company disclosed its 2023 annual report: In 2023, the company achieved operating income of 37.642 billion yuan, a year-on-year decrease of 5.57%, and realized a profit of 6.249 billion yuan to mother, an increase of 22.27% over the previous year.
Incident comments
The expansion of installed capacity is progressing steadily, lowering the electricity price center at affordable prices. In 2023, the company added 1,562,600 kilowatts of installed capacity of wind power holding, 2,9473 million kilowatts of installed capacity, biomass holding capacity decreased by 24,000 kilowatts due to the bankruptcy and liquidation of biomass power generation in the East China Sea. As of the end of 2023, the company held an installed capacity of 355.937 million kilowatts, of which wind power holding installed capacity was 277.54 million kilowatts, photovoltaics and other renewable energy holding installed capacity of 18.75 million kilowatts. Thanks to the expansion of installed capacity, the company achieved a cumulative total of 76.226 billion kilowatt-hours of power generation during the same period, an increase of 7.92% over the same period, including 61,353 billion kilowatt-hours of wind power, an increase of 5.22% over the previous year, and 4.553 billion kilowatt-hours from other renewable energy sources such as photovoltaics, an increase of 159.83% over the previous year. Thanks to the increase in average annual wind speed and improved fault warning management capabilities, the average number of hours the company used wind power in 2023 was 2,346 hours, an increase of 50 hours compared to 2022. The company achieved an average feed-in price of 0.443 yuan/kilowatt-hour in 2023, a year-on-year decrease of 0.025 yuan/kilowatt-hour, which is the main reason for the year-on-year decline in revenue: among them, wind power achieved an average feed-in price of 0.457 yuan/kilowatt-hour, a year-on-year decrease of 0.024 yuan/kilowatt-hour, mainly due to factors such as increased marketability ratio and increased affordable projects; the average feed-in price of PV was 0.308 yuan/kilowatt-hour, a year-on-year decrease of 0.095 yuan/kilowatt-hour, mainly due to the fact that the newly put into operation were all affordable projects.
Impairment affects the past, and transforms and enhances the future. Although the company's financial expenses fell 10.59% year on year to 3.403 billion yuan due to the impact of reduced exchange losses, the company's assets depreciated by 2,086 billion yuan in 2023, and depreciated by more than 2 billion yuan after 2022, ultimately limiting the annual profit margin performance. Among them, the company has calculated impairment reserves of 1,194 million yuan for fixed assets, 639 million yuan for impairment of intangible assets, 73 million yuan for impairment of construction materials, and 179 million yuan for impairment reserves for projects under construction. Since the company seized the opportunity to carry out “big generation to small” renovation and upgrading of old wind farms for some regional projects in Heilongjiang, Gansu, Inner Mongolia, Liaoning, Jilin, Fujian, etc., it has calculated fixed asset impairment preparations and intangible asset impairment preparations of 856 million yuan and 639 million yuan respectively for the old units to be scrapped. At the same time, the company's assets such as Longyuan Songzhou Wind Power Yakeshi Branch, Longyuan Zhangbei Wind Power, and Longyuan Cili New Energy have calculated fixed asset impairment reserves of 311 million yuan due to losses or declining profit expectations. In addition, some of the company's projects in Heilongjiang, Shandong, and other regions may have terminated subsequent construction due to approval procedures, etc., and has calculated an impairment of 179 million yuan for projects under construction and 73 million yuan for construction materials. However, in 2023, the company added 54 GW of resource reserves, including 24.65 GW of wind power and 23.95 GW of photovoltaics, all located in regions with good resources. At the same time, the development index exceeded 22.75 GW throughout the year, with a new energy development index of 19.84 GW. Although significant depreciation affected last year's performance to a certain extent, the full-year performance was in line with expectations after the deduction. At the same time, the impairment meant that the renovation of the “old wind farm” was officially launched, and the high-quality resource endowments that the company had seized in the early stages would be further profitable and monetized after the transformation was completed.
Investment advice and valuation: According to the latest financial data, we adjusted the company's profit forecast. We expect EPS to be 1.02, 1.16, and 1.36 yuan respectively for 2024-2026, corresponding PE of 18.08 times, 15.98 times, and 13.55 times, respectively, maintaining the company's “buy” rating.
Risk warning
1. The risk that the commissioning progress and benefits of new construction projects fall short of expectations;
2. Wind conditions and lighting resources fall short of expected risks.