Incident: The company released its 2023 annual report & 2024 quarterly report. In 2023, the company achieved revenue of 1.48 billion yuan, an increase of 4% year on year; realized net profit of 4.4 billion yuan, an increase of 25% year on year, and achieved investment income of 4.8 billion yuan, an increase of 23% year on year.

Net investment income drives the company's performance growth. In 2023, the company achieved a net investment income of 4.81 billion yuan, an increase of 23% over the previous year. Among them, the investment income of Yalong River Company increased by 60 billion yuan year on year, the investment income of Daduhe Company increased 150 million yuan year on year, and the investment income of CNNC Huineng increased by 120 million yuan year on year. At present, Yalong River Company's clean energy installed capacity has exceeded 20 GW, of which 19.2 GW of hydropower has been built and put into operation, and more than 1.6 GW of new wind energy. The “Ichiang River” has significant advantages in joint optimization and scheduling. The company is expected to continue to benefit from Yalong River Company's resource advantages.

A high percentage of dividends are returned to shareholders. During the reporting period, the company paid 0.40 yuan in cash (tax included) per share, with a dividend ratio of 44.3%. In 2020-2022, the company's dividend ratio remained high, reaching 53.0%, 57.1%, and 50.8% respectively, continuing to give back to shareholders.

24Q1 incoming water was better than the same period last year. In a single quarter of 24Q1, the company achieved revenue of 260 million yuan, up 3% year on year, achieved net profit of 1.27 billion yuan, up 12% year on year, and achieved investment income of 1.33 billion yuan, up 6% year on year; benefiting from improved incoming water supply, 24Q1's water and electricity feed-in price was +12.8% year over year, and feed-in price was 0.283 yuan/kilowatt-hour, up 0.4% year on year; affected by lighting conditions, photovoltaic power generation decreased 24.4% year on year, and the feed-in price was 0.570 yuan/kilowatt-hour (including state subsidies), a year-on-year decrease of 10.9%.

Profit forecasting and investment advice. The company's net profit due to mother in 2024-2026 is estimated to be 49.3/53.3/5.75 billion yuan, respectively, corresponding to 2024-2026 PE of 16.7/15.5/14.3 times, respectively, maintaining a “buy” rating.

Risk warning: The construction progress of hydropower plants falls short of expectations, the risk of declining electricity demand in the power industry, fluctuations in precipitation in the watershed where the hydropower plant is located, and policy risks.