Core views:
Operating profit is stable, and significant impairment affects performance. In 2023, the company achieved operating income of 37.642 billion yuan (-5.6% YoY) and net profit of 6.249 billion yuan (YoY +22.3%). The decline in the volume and price of the coal sales business led to 49.5% of the revenue of the thermal power division; the expansion of installed wind power generation led to an increase in power generation, and the division's operating profit was -5.3%/+326% year-on-year, respectively, and the total operating profit was basically stable.
The company's financial expenses were -40 billion yuan year over year, investment income was +4.9 billion yuan year over year, impairment losses were +150 million yuan year over year, and profit and loss of minority shareholders decreased by 490 million yuan year on year, leading to an increase in profits. In 2023, the company's dividend rate was raised to 30%, corresponding to the H-share dividend rate of 4.5%.
In 2023, 4.5GW of new wind power installed capacity was added, and wind power prices all dropped. In 2023, the company achieved 76.2 billion kilowatts of electricity (+7.9% YoY), of which: wind power generation capacity was 61.4 billion kilowatts (+5.2% YoY), mainly 1.56 GW of installed capacity (cumulative 27.75 GW at the end of the year), but feed-in electricity prices were -5.3% YoY; other renewable energies generated 4.55 billion kilowatts (+160% YoY), mainly due to the addition of 2.95 GW of PV installations (cumulative 596 GW at the end of the year), but the PV feed-in price was only 0.308 yuan/kilowatt (-23.6% year-on-year, excluding wind and solar tax) The main reason for the decline in prices This is due to participation in market-based transactions and an increase in affordable projects. The company's electricity profit in 22/23 was 0.125/0.121 yuan/degree, respectively.
The installation is accelerated and the Group's asset integration space is taken into account, and the company has broad room for growth. In 2023, the company achieved a development target of 22.75 GW, including wind power/photovoltaic/pumped energy storage/energy storage of 5.07/14.77/2.38/0.53GW respectively. Wind power may cause short-term asset impairment from generation to generation, but old projects are mainly located in regions with abundant wind resources, and replacing fans will bring about both improvements in installed capacity and efficiency.
In 2024, the company plans to start construction of 10 GW of new energy installed and 7.5 GW connected to the grid.
Profit forecasting and investment advice. The company's net profit from 2024 to 2026 is estimated to be 78.6/89.3/10.07 billion yuan, respectively, and the PE corresponding to the latest closing price is 19.8/17.4/15.5 times, respectively. The landscape is being installed at an accelerated pace, and there is plenty of room for growth. Referring to peer valuation, the company was given a PE valuation of 20 times in 2024, corresponding to a reasonable value of 18.76 yuan/share, and an 8 times PE valuation for H shares, corresponding to a reasonable value of HK$8.27 per share for H shares, maintaining a “buy” rating.
Risk warning. System adjustment costs have increased; project construction has fallen short of expectations; abandonment of wind and light has increased.