Incident: The company released its 2023 annual report, achieving annual revenue of 254.40 billion yuan, +3.1% year-on-year; achieving net profit of 8.45 billion yuan to mother, turning a loss into a profit.
Stable electricity prices throughout the year, electricity consumption increased, and fuel costs dropped significantly to help the company reverse losses. In the whole of '23, the company's average online electricity price was 508.74 yuan/megawatt-hour, a slight decrease of 0.2% over the previous year. Among them, the electricity price settled for coal-fired units remained at the level of 22. In '23, the company completed 447.9 billion kilowatt-hours of feed-in power, +5.3% year-on-year. Among them, thermal power units continued to perform the power guarantee function, and feed-in power was +3.4% year-on-year. In '23, the domestic coal supply level continued to grow from last year's high base. At the same time, imported coal increased dramatically over the same period last year, and the tight relationship between supply and demand was clearly alleviated. Furthermore, the strength of the Electricity and Coal Cooperation Policy has not decreased. Under the dual influence of the market and policy, the average price of port coal is -24% throughout the year. Due to the resonance of multiple factors in electricity prices, electricity consumption, and fuel costs, the company achieved net profit of 8.45 billion yuan to mother for the full year of '23, turning a loss into a profit.
New energy sources are developing rapidly, and the proportion of installed capacity and power generation is constantly increasing. The company added 8859 MW of wind power and photovoltaic installed capacity in '23. By the end of 23, the total share of wind power and photovoltaics in the company's installed structure had further increased by 5.45 pcts compared to the same period in '22 to 21.09%. The annual share of wind power and photovoltaics in total feed-in electricity increased by 1.7 pct to 9.5% over the same period last year. Due to falling wind power prices and peak frequency modulation costs, pre-tax profit of wind power decreased by 5.16% year on year; profit before tax of photovoltaic power generation increased sharply by 78.08% year on year.
Improve the efficiency of overseas projects and enhance performance. Affected by the tight electricity supply in Singapore, the trading price of 1H23 Singapore Electricity rose. In the second half of the year, Dashi Energy achieved pre-tax profit of 4.355 billion yuan for the whole year, an increase of 2,477 billion yuan over the previous year, boosting the company's performance.
The cash dividend ratio is 57.14%. According to the company's 23-year profit distribution plan, a cash dividend of 0.20 yuan will be distributed per share, and a total cash dividend of 3.140 billion yuan is expected. The annual cash dividend ratio after deducting interest on perpetual bonds is 57.14%.
The year-on-year decline in coal prices for the year was lower than expected, and the impairment of fixed assets was higher than expected. We lowered the company's 24-25 profit forecast. The net profit attributable to the parent company for 24-26 was 121.41/144.75/16.229 billion yuan, respectively (the original 24-25 forecast was 160.00/18.051 billion yuan), and corresponding earnings per share were 0.77/0.92/1.03 yuan respectively (the original 24-25 forecast was 1.02/1.15 yuan). Referring to the average valuation of comparable companies, the company was given a PE valuation of 14 times in 2024, corresponding to a target price of 10.78 yuan, maintaining a “buy” rating.
Risk warning
Renewable energy projects have fallen short of expectations; coal prices have risen above expectations; electricity prices have fallen beyond expectations; and there is a risk of asset depreciation.