Operating profit remained stable. The company achieved revenue of 37.638 billion yuan in 2023, -5.6% year-on-year, and net profit attributable to equity holders of the company was 6.355 billion yuan, +23.9% year-on-year. The decline in revenue in '23 was mainly due to the decline in annual coal prices during the period, and coal sales revenue fell 49.5% year on year to 3.42 billion yuan. The company's operating profit remained stable. The increase in net profit due mainly to a year-on-year decrease in financial expenses of about 363 million yuan and a year-on-year increase in profits attributable to associated companies and joint ventures of 447 million yuan. The net cash inflow from the company's operating activities in 2023 was 13.884 billion yuan, a decrease of 15.684 billion yuan from 29.568 billion yuan in the same period last year, mainly due to a decrease in the repayment of electricity sales subsidies receivable.
Electricity generation continues to grow, and feed-in tariffs have declined. Benefiting from the steady increase in the company's installed capacity, the company completed a cumulative total of 76,225.8 gigawatt-hours of power generation in 2023, an increase of 7.9% over the previous year. Among them, wind power, thermal power, and other renewable energy generation capacity was +5.2%, -2.4%, and 159.8%, respectively. The company's overall power generation capacity continued to grow. In terms of feed-in tariffs, the company's average feed-in tariff in 2023 was 443 yuan/MWh (excluding VAT, same below), down 5.34% year on year. Among them, the average feed-in price for wind power, photovoltaics, and thermal power was 457, 308, and 417 yuan/MWh, respectively, -4.99%, -23.57%, and +4.25% year-on-year, respectively. Due to the expansion of market transactions and the increase in affordable projects, wind power and photovoltaic feed-in tariffs all declined.
The scale of the new installed capacity is expected to increase rapidly, and “from big to small” is beneficial to improving efficiency in the long run. (1) As of the end of 2023, the company's holding installed capacity was 35.59 GW, of which 27.75, 1.88, and 5.96 GW of wind power, thermal power and other renewable energy sources were installed, respectively. The company added 4.51 GW of holding installed capacity in 23, of which 1.56 and 2.95 GW were added for wind power and photovoltaics respectively. In 2024, the company plans to start 10 GW of new energy projects and put into production 7.5 GW. (2) The company currently has nearly 10,000 units of 1.5 MW and below, accounting for 68% of the total number of units in operation. Although the company's “big generation and small” plan is to dismantle old units in 2023 and prepare for impairment of about 1.5 billion yuan, most of the old projects are located in regions with good wind resources. Looking at the “big generation and small” plan for fans in the long run, it will help improve operating efficiency.
Profit forecast and valuation: We expect the company's revenue for 24-26 to be $410.1/450.6/$50.06 billion, respectively, and net profit attributable to equity holders of the Company to be $81/91.9/10.25 billion yuan, respectively. Earnings per share are 0.97/1.10/1.23 yuan/share, respectively. The price-earnings ratio corresponding to the current stock price is 5.13/4.52/4.05 X, respectively. As a leading company in wind power operations, the company's installed energy capacity is expected to peak. Major shareholders will continue to inject new energy assets, and the valuation level is expected to increase. Maintain a “buy” investment rating and give a target price of HK$11, corresponding to PE 10.4 X in 2024. (1 HKD = 0.92 RMB)
Risk warning: The wind fell short of expectations; the scale of new installed capacity fell short of expectations; the drop in feed-in tariffs exceeded expectations.