Incident: Recently, the company disclosed its 2023 annual report. In 2023, the company achieved revenue of 122.404 billion yuan, a year-on-year increase of 4.77%; realized net profit to mother of 1,365 billion yuan, turning a year-on-year loss into a profit.

Comment:

The volume and price of the company's electricity rose sharply in 2023, and the unit fuel cost fell year-on-year. The company's revenue growth was due to a sharp rise in the volume and price of electricity. In 2023, the company completed feed-in power of about 259.426 billion kilowatt-hours, an increase of 12.496 billion kilowatt-hours over the previous year, resulting in a year-on-year increase of 5,096 billion yuan in electricity sales revenue; the company's feed-in tariff (tax included) was 466.41 yuan/megawatt-hour, an increase of 5.62 yuan/megawatt-hour over year, leading to a year-on-year increase of 1,291 billion yuan in electricity revenue. The company turned losses into profits due to factors such as a year-on-year decline in fuel costs per unit. In 2023, the company's fuel cost per unit of thermal power decreased by 27.21 yuan/megawatt-hour year on year, resulting in a year-on-year decrease of 5.762 billion yuan in fuel costs. Looking at a single quarter, 2023Q4 achieved revenue of 31,785 billion yuan, a year-on-year increase of 7.46%; realized net profit to mother of 1.47 billion yuan, and losses increased year-on-year, mainly due to a year-on-year increase in asset impairment losses and a year-on-year increase in income tax expenses.

The company vigorously promoted the low-carbon clean energy transition. In 2023, the company added 4799.2 megawatts of installed capacity, including 2047.5 megawats/1604.7 megawats/577 megawatts for wind power/photovoltaic/thermal power combustion engines respectively. In 2023, the company's share of low-carbon clean energy installations such as natural gas, hydropower, wind power, and solar energy increased further to 37.75%, an increase of 4.65 percentage points over the previous year.

The company's project approval and construction are progressing in an orderly manner, and it is expected to contribute to increased power generation in the future. In 2023, the company received approval for 184 power projects, with an approved capacity of 12782.43 megawatts, of which the approved capacity for coal engine/gas engine/wind power/photovoltaic projects was 4000 MW/1076 MW/2217.3 MW/5489.13 MW, respectively. The installed capacity of the company's projects under construction in 2023 was 9964.65 megawatts, of which the installed capacity of thermal power/wind power/photovoltaic/energy storage projects was 4670.12 MW/3047.65 MW/2146.88 MW/100 MW, respectively. The company's project approval and construction are progressing in an orderly manner, and it is expected to contribute to increased power generation in the future.

Investment advice: The company's EPS is expected to be 0.22 yuan, 0.28 yuan, and 0.32 yuan respectively in 2024-2026, and the corresponding PE will be 13 times, 11 times, and 9 times, respectively, maintaining the company's “buy” rating.

Risk warning: policy progress falls short of expectations; economic development falls short of expectations; risk of feed-in electricity price fluctuations; risk of thermal coal price fluctuations, etc.