Key points of investment:
Incident: The company released its report for the first quarter of 2024. The 1Q24 company achieved operating income of 19.182 billion yuan, up 4.88% year on year, and net profit attributable to shareholders of listed companies of 3,604 billion yuan, up 3.38% year on year; basic earnings per share reached 0.071 yuan, up 2.90% year on year, and performance was in line with our expectations.
The overhaul period for the operating units was slightly longer than the same period. Fangchenggang Unit 3 and Taishan Unit 1 led to a steady increase in feed-in power in the first quarter.
Most of the company's nuclear power plants took more time to replace and overhaul in the first quarter of 2024 than in the same period of 2023, and the power generation of most of the company's power plants declined slightly year-on-year in 1Q24. Among them, the Daya Bay Nuclear Power Plant underwent a new material replacement overhaul in the first quarter of 2024. The power generation capacity decreased by 21.28% year on year, and the feed-in electricity volume decreased by 21.72% year on year. The increase in the company's power generation in the first quarter mainly came from Fangchenggang Unit 3 and Taishan Nuclear Power Plant Unit 1. Fangchenggang Unit 3 was put into commercial operation on March 25, 2023. Under the low base for the same period last year, 1Q24's Fangchenggang Nuclear Power Plant's power generation capacity increased 7.90% year on year, and feed-in power increased 29.37% year on year. Taishan Unit 1 completed the replacement and overhaul work in November 2023 and resumed normal operation in the first quarter of this year. The power generation capacity increased 51.24% year on year, and the feed-in power supply rose 51.38% year on year. In the first quarter of 2024, the total power generation capacity of the company's nuclear power units was about 55.08 billion kilowatt-hours, up 0.39% year on year; feed-in power was about 51.814 billion kilowatt-hours, up 1.83% year on year.
The new units are about to be put into production, which is expected to unleash flexible performance. On April 9, 2024, Unit 4 of the Guangxi Fangchenggang Nuclear Power Plant successfully achieved its first grid-connected power generation, indicating that the unit has power generation capacity and is expected to be put into operation in the first half of the year. The capacity factor of Unit 3 of the Fangchenggang Nuclear Power Plant reached 98.2% in 2023. It is expected that Unit 4 will maintain high operating efficiency after it is put into operation, driving the company's performance to continue to grow.
The company has entered a period of intensive construction and installation, reducing the pressure on corporate financial costs during the period of high capital expenditure in the context of interest rate cuts. By the end of the reporting period, the company had managed a total of 11 nuclear power units that had been approved for FCD and were under construction (including 6 units managed by the company's controlling shareholders). 2 units were in the commissioning stage, 3 were in the equipment installation stage, 2 were in the civil construction phase, and 4 were in the FCD preparation stage. Considering that third-generation nuclear power plants have entered the batch construction stage, in the long run, with the accumulation of project management and construction experience, the cost and construction cycle of Hualong 1 units is expected to continue to be optimized, increasing the overall return on subsequent projects.
As the company's ongoing projects gradually increase, we expect the company's capital expenditure to rise year by year. However, considering that the domestic five-year LPR continues to decline, companies can reduce the pressure on financial expenses through debt replacement and short-term financing during the interest rate cut cycle. The financial expenses of 1Q24 were 1,270 million yuan, a year-on-year decrease of 0.2 billion yuan.
Profit forecast and rating: Based on the company's operating conditions in the first quarter, we maintained the company's net profit to mother for 2024-2026 at 119.55, 124.78, and 13.544 billion yuan, respectively. The current stock price is 18, 17, and 16 times PE, respectively. Nuclear power consumption is stable, and the company's performance is stable and growing, maintaining a “buy” rating.
Risk warning: The progress of the new installation fell short of expectations, and the overhaul of the unit took longer than expected