Introduction to this report:
The pressure on the company's 4Q23 performance is mainly related to depreciation; the growth and performance elasticity of the company's thermal power business is expected to resonate in the context of a central decline in coal prices.
Key points of investment:
Maintain the “gain” rating: Considering the decline in Changxie electricity prices in Guangdong in 2024, EPS will be lowered to 0.35/0.49 yuan from 2024 to 2025 (originally 0.49/0.62 yuan), and EPS in 2026 will be given 0.62 yuan.
Based on the comparable company's PE valuation situation, the company was given a valuation of 13x PE in 2025, the target price was lowered to 6.37 yuan, and the “gain” rating was maintained.
The 4Q23 results were in line with expectations. The company's revenue in 2023 was 59.7 billion yuan, +13.4% year-on-year; net profit to mother was 970 million yuan, reversing losses year on year, in line with the performance forecast range. On a quarterly basis, the company's 4Q23 revenue was 14.5 billion yuan, +10.3% year-on-year; net profit to mother was 750 million yuan, a year-on-year decrease of 530 million yuan. The proposed dividend in 2023 is 0.02 yuan/share, accounting for 10.8% of net profit attributable to mother.
The pressure on 4Q23 performance is mainly related to impairment. In 2023, the company added 2.43 GW of installed capacity, including 0.45/1.97 GW of wind power/photovoltaics. The company's 4Q23 feed-in electricity capacity was 275 billion kilowatt-hours, +3.4% year on year; gross profit margin was 14.9%, +15.7 ppts year on year; net profit - 8.1 billion yuan, a year-on-year loss of 1.1 billion yuan. We believe that the pressure on 4Q23 results is mainly related to impairment: 4Q23 accrued assets depreciation of 1.29 billion yuan, a year-on-year increase of 1.12 billion yuan.
There are plenty of reserve projects and sufficient performance flexibility. By the end of 2023, the company had 14.7 GW of installed capacity under construction and 9.7 GW of approved installed capacity, including 12.7 GW of installed capacity under construction and 3.5 GW of approved installed capacity. The share of the company's thermal power business is still high: in 2023, the company's thermal power generation capacity was 114.2 billion kilowatt-hours, accounting for 94.7% of the company's power generation during the same period; the company's net profit from coal power was 870 million yuan, accounting for 88.8% of the company's net profit to mother during the same period. Against the backdrop of a central decline in coal prices in the market, the growth and performance flexibility of the company's thermal power business is expected to resonate.
Risk warning: The rise in coal prices exceeded expectations, installed capacity fell short of expectations, electricity prices fell short of expectations, etc.