Key points of investment
2024Q1 made a profit of RMB 4.596 billion, up 104.25% year over year:
In the first quarter of 2024, according to Chinese accounting standards, the company's operating income was about 65.367 billion yuan (RMB, same below), an increase of 0.15% over the previous year; net profit attributable to shareholders was about 4,596 billion yuan, an increase of 104.25% over the previous year; and basic earnings per share were 0.25 yuan. The company performed well in the first quarter. In particular, coal and electricity profits recovered significantly. 2024Q1 achieved a total profit of 2,825 billion yuan (2023Q1 was a loss of 70 million yuan), and the coal machine's electricity profit was about 3.1 percent. With the average settlement unit price of coal mills falling by 3.99%, the company's coal machine profits have drastically reversed losses and mainly benefited from the decline in coal prices. The unit price of the company's standard coal and unit fuel costs both fell 13% in 2024Q1.
The 2024 plan is to add 10GW of wind power installed, and wind power profits will continue to grow steadily:
As of 2024Q1, the installed capacity of wind power photovoltaic power generation reached 302.17 million kilowatts, and the proportion of installed low-carbon clean energy increased to 32%. In recent years, the company's green power installation has accelerated markedly. In 2023, the company added about 8.86 GW of new energy, and in 2024, the company plans to add 10 GW of scenery. Of these, the company's infrastructure added 1.606 million kilowatts of installed capacity in the first quarter, and it is expected that most of it will be put into operation in the fourth quarter.
2024Q1's wind power achieved a total profit of 2,414 billion yuan, an increase of 25.41% over the previous year, so in 2024, coal power and wind power will be the core stable source of the company's profit contribution.
Long-term reasonable returns from coal and electricity are guaranteed to support the company's dividend rate level:
Based on coal price trends, the implementation of electricity prices between the medium and long term and electricity prices, long-term reasonable returns from coal and electricity have been effectively guaranteed, and profits have stabilized since cyclical fluctuations in the past. As profits stabilize and cash flow improves, power companies have begun to increase dividend rates, which will further enhance the utility attributes of the power industry, and future valuation increases are worth looking forward to. After the company turned a loss into a profit in 2023, the dividend rate reached 57.14%. It is expected that the improvement in coal and electricity profits in 2024 will further support the dividend level.
The target price was updated to HK$5.89 to give a holding rating:
We updated the company's target price to HK$5.89, which is equivalent to 7 times and 6.3 times and PE in 2024 and 2025. There is room for a 17% increase in the target price compared to the current price, giving it a holding rating.