Results continued to improve throughout the year, and cash flow increased substantially. The company announced its 2023 results, achieving full year's main revenue of 44.3 billion yuan (+1.3% YoY) and net profit of 2,660 billion yuan (+7.2% YoY). Performance continues to improve, considering mainly that thermal power turned loss into profit under the coal-power joint venture and that Green Power was installed and put into operation. The annual performance growth rate declined from the first half of the year (+118% year over year). It is expected that asset restructuring and acquisitions in the second half of 2022 will have a large impact on one-time returns. In terms of net profit, thermal power, hydropower, wind power, photovoltaics, and energy storage were 13.15, -8.26, 31.16, 15.04, and 37 billion yuan respectively in 2023. Among them, thermal power increased 2.7 billion yuan year on year, wind power and photovoltaics increased by 82.5% and 46.9% year on year. The company's net operating cash flow in 2023 was $9.9 billion (+73.0% YoY).
13 GW of green electricity was added throughout the year, and clean energy accounts for more than 75% of the installed capacity. At the end of 2023, the holding's installed capacity reached 45 GW (38 GW of equity installed capacity), of which 34 GW of clean energy, accounting for 75.4% (+10.5 pct year on year); 4.8/7.9 GW of new wind power/photovoltaics were added during the year, respectively. Considering that the majority shareholders' 9GW clean energy generation asset acquisition has been completed, it is expected that self-construction will add about 4 GW. According to the official website, wind power/photovoltaics plan to add 4.5/2.5 GW in 2024, so clean energy accounts for 78% + of installed capacity.
I am optimistic about the continued recovery of coal, electricity, and hydropower profits, and expect both profit and dividends to increase. In 2023, the profit from coal-fired power generation was 2.3 points (of which 2 points for the first half of the year); with reference to the normal year of incoming water, there is plenty of room for upward growth in hydropower profits. In 2023, it is proposed to distribute a discovery dividend of 0.132 yuan/share, which is about 61% of net profit to mother, corresponding to a dividend rate of 4.5%. It is expected that both performance and total dividends will increase.
Profit forecasting and investment advice. The company's net profit from 2024 to 2026 is estimated to be 44.93, 56.82, and 7.019 billion yuan, respectively, and 7.99, 6.32, and 5.12 times PE, respectively, according to the latest closing price. The company is a leading domestic electricity company, with continuous improvement in asset quality and diversified development of scenery, water and fire storage. Referring to the peer valuation level, the company was given 10 times PE in 2024, corresponding to a reasonable value of HK$3.96 per share, maintaining a “buy” rating.
Risk warning. Coal prices continue to rise; construction and utilization hours for new energy projects fall short of expectations, etc.