Incident: The company released its 2023 annual report. In 2023, the company achieved operating income of 4.822 billion yuan, up 22.64% year on year; net profit to mother of 293 million yuan, up 611.45% year on year; net profit after deducting non-return to mother was 380 million yuan, up 359.16% year on year; basic earnings per share were 0.3504 yuan/share, up 602.73% year on year.

The amount of feed-in electricity and car sales have risen sharply, supporting a sharp increase in the company's performance. In 2023, the company completed 7.169 billion kilowatt-hours of feed-in electricity, an increase of 21.56% over the previous year; the sales volume was 3.9433 million tons, an increase of 3.67% over the previous year.

In 2023, the company achieved operating income of 4.822 billion yuan, an increase of 22.64% over the previous year; net profit attributable to shareholders of listed companies was 293.1103 million yuan, an increase of 611.45% over the previous year, mainly due to a sharp rise in feed-in electricity prices during the reporting period, a drop in coal prices, and an increase in outsourced gas costs due to grid-connected power generation in the Eastern District gas and power project.

The company is actively developing gas and electricity. The 2×460MW “gas instead of coal” project in Hengyun East District was fully put into operation in September 2023; the Baiyun 2×460MW natural gas power generation project was fully started in July 2023; and the Knowledge City 2×460MW natural gas power generation project actively promoted early work. After all six natural gas units are completed, they will provide lower carbon, safer, and more efficient power point support to guarantee the electricity and heat supply in the Greater Bay Area. Furthermore, according to the company's March 8 investor relations activity record sheet, the company plans to upgrade the 1.08 million kilowatt small coal-fired unit and plan to build a new ultra-supercritical large unit. We believe that in the future, as new units are put into operation, it will support the steady growth of the company's performance.

Focus on the main energy industry and transform and upgrade to clean new energy sources. 1) In terms of photovoltaic power plants: In terms of photovoltaic power plants, the Jiangmen Taishan Haiyan 500MWp fishery PV project will be put into full capacity within 2023, and the economic, ecological and social benefits are outstanding. Currently, the construction of the 550 MWp fishery PV project in Shantou has made major breakthroughs and is expected to be put into operation in 2024. 2) In terms of centralized heating: The Thermal Energy Group implements the “going global” strategy to continuously expand high-quality energy supply projects, and has achieved new major results, adding centralized heating projects such as Dongguan Haofeng Industrial Park and Suifeng Food Smart Port Park. 3) In terms of hydrogen energy: The company actively played a leading role in the hydrogen energy chain and achieved the “First Line, One Station, One Fund” (“First Line” means: the first hydrogen bus demonstration line in Guangzhou; “One Stop” means the construction of Guangzhou's first “Five in One” integrated energy station; “One Fund” means: the establishment of Guangzhou's first hydrogen energy industry parent fund - Guangzhou Development Zone Wan Ding New Kinetic Energy Industry Investment Fund). A hydrogen energy technology company was formed as a joint venture with Hyundai Motor Hydrogen Fuel Cell System (Guangzhou) Co., Ltd. and Guangzhou Development Zone Transportation Investment Group Co., Ltd., to implement localized production of components, and the first batch of 60 hydrogen energy logistics vehicles was officially put into use. 4) In terms of energy storage: The company built the first state-owned enterprise equipped with intelligent energy storage production line in the province — a 2GWh new energy storage integration and high-end lithium battery PACK manufacturing production line; actively developed grid-side, power-side, and user-side energy storage businesses, explored various energy storage technology routes such as lithium battery energy storage, flywheel energy storage, full vanadium liquid flow, pumped energy storage, etc., and made every effort to create a new “R&D+manufacturing+investment” energy storage business.

Investment advice and valuation: The company focuses on the main energy industry, conforms to the national energy development strategy, responds positively to the call for “carbon peak, carbon neutrality”, and makes every effort to strengthen, improve and expand the four major sectors of “electricity, heat, hydrogen and storage”, empowered by scientific and technological innovation, and build an “energy+technology” industrial system. We adjusted the company's profit forecast based on the company's actual operating situation, and added a 26-year forecast. We expect that in 2024-2026, the company's revenue will be 5.324 billion yuan, 6.628 billion yuan, and 6.976 billion yuan respectively, with growth rates of 10.4%, 24.5%, and 5.2% respectively, and net profit of 311 million yuan, 362 million yuan, and 410 million yuan, respectively. The growth rates are 6.2%, 16.4%, and 13%, respectively.

Risk warning: Project progress falls short of expectations; approval progress falls short of expectations; risk of rising coal prices; risk of falling electricity prices; policy progress falls short of expectations.