Brief performance review
On the evening of April 23, 2024, the company disclosed its quarterly report for the year 24. 1Q24 achieved revenue of 65.37 billion yuan, +0.2% year over year; net profit to mother was 4.596 billion yuan, +104.3% year over year. The performance was outstanding, and the profit of coal-fired power generation increased significantly.
Management analysis
Coal-electricity prices are linked smoothly, and reasonable benefits from thermal power continue to rise. The company's 1Q24 coal/combustion engine sector achieved total profit of 2.83 billion yuan (1Q23 was -0.7 billion yuan, a significant loss in the current period) and 540 million yuan (+64.3% year over year), with total corresponding electricity profits of 0.03 yuan/kWh and 0.08 yuan/kWh, respectively. According to the company's business performance announcement, the average online settlement electricity price in 1Q24 was 497.97 yuan/kWh, -3.99% compared with the same period last year. In the context of declining electricity prices, electricity profits have increased dramatically. On the one hand, it reflects the current strong upstream and downstream position of leading thermal power companies; on the other hand, it reflects the profit support effect brought about by the implementation of the electricity price mechanism for coal-electricity capacity, and reasonable long-term benefits from thermal power can be expected.
1Q24 wind power added to speed up installation. 1Q24's wind power/photovoltaic feed-in electricity volume was +24.1%/+73.7%, respectively, and the total profit contribution was 24.1/370 million yuan, respectively, +25.4%/+7% year-on-year, respectively. The wind power profit growth rate during the windy season was slightly higher than the electricity growth rate.
As the share of new energy entering the market and consumption increases, the advantages of wind power assets with peak output capacity will be further demonstrated. According to the company's business performance announcement, 1Q24's new wind power/photovoltaic installations were 86.9/737,000 kilowatts, respectively, with wind power accounting for 54.1% of them. The number of new wind power installations for each quarter from 1 to 4 Q23 was
11.1/29.7/60.7/1.018 million kilowatts. Against the backdrop of the continuous decline in fan costs, the pace of the company's wind power investment and construction accelerated.
Profit Forecasts, Valuations, and Ratings
The recovery of thermal power profits exceeded expectations and the installation of wind power assets accelerated. Therefore, we revised the company's profit forecast for 24/25. We expect the company to achieve net profit of 147.1/166.5/17.89 billion yuan and EPS of 0.94/1.06/1.14 yuan respectively from 2024 to 2026. The corresponding PE is 10 times, 9 times, and 8 times, respectively, maintaining a “buy” rating.
Risk warning
There is a risk that the installed capacity and electricity volume of various types of power supplies fall short of planned expectations, falling coal prices falling short of expectations, and falling electricity prices beyond expectations.