2023/1Q24 net profit to mother was +57% YoY /loss reversed, and the target price was raised, CCE Energy released its annual report and quarterly report. In 2023, it achieved revenue of 18.9 billion yuan (+3.5% YoY), net profit to the mother of 167 million yuan (+57% YoY), net profit to the mother was lower than Huatai's forecast (367 million yuan); 1Q24 achieved revenue of 6.6 billion yuan (YoY +23%), net profit to the mother of 2.44 billion yuan (YoY reversal loss) (year-on-year reversal of losses), thanks to electricity Growth, stable electricity prices, and falling coal prices. According to the 2023/1Q24 operating data changes, the unit price of standard coal and feed-in electricity prices will be lowered. Raising the profit forecast, we expect the company's 2024-2026 EPS to be 0.40/0.51/0.58 yuan (previous value 0.33/0.48/- yuan) and BVPS of 5.78/5.95/6.10 yuan, respectively.
Comparable to the 24-year Wind, the average PB was expected to be 1.3 times, giving the company 1.3 times PB in 24, and the target price was 7.51 yuan (previous value 6.42 yuan). Maintain an “Overweight” rating.
The amount of coal electricity continues to grow, and the decline in electricity prices is lower than the decline in coal prices
In 2023/1Q24, the company's power generation capacity was +10%/+21% year over year to 42.5/12.7 billion kilowatt-hours. The growth rate in 2023 was slightly higher than the overall power generation growth rate in Hebei Province (+9.6% year over year). In 2023/1Q24, the company's average electricity price was -5.6%/-1.2% year-on-year to 450/446 yuan/megawatt-hour (tax included). The company actively participated in market-based transactions to maintain a good comprehensive electricity price level. In 2023, the company's coal power installed capacity increased by 700,000 kilowatts to 9.85 million kilowatts, thanks to the commissioning of Shouyang Thermal Power. Renqiu Thermal Power Phase II and Xibaipo Power Plant Phase IV were approved in March 2023, with a total installed capacity of 1.36 million kilowatts. The company plans to start construction in 2H24 and is expected to be put into operation as early as 2026. In 2023, the company's gross margin of thermal power was +0.9pp year on year, thanks to the increase in electricity volume and the unit price of standard coal fell 6% year on year; the unit price of standard coal fell 15% year on year in 1Q24.
Strengthen the development of new energy sources, and complement each other to improve the asset structure
The company wholly established Jineng Renewable Energy Company in 2023, which mainly develops clean energy projects in Inner Mongolia Autonomous Region. The company purchased shares in Jianhao Company at the end of June 2023 and plans to complete a wholly-owned holding to accelerate its entry into the photovoltaic power generation sector. By the end of 2023, the company had put into operation PV projects with a capacity of 310,000 kilowatts, 800,000 kilowatts of projects under construction, and obtained a target of 1.01 million kilowatts in 2023. The company set up a construction investment energy storage company to participate in liquid compressed air energy storage technology research and development; the company is actively seeking the right to participate in savings projects.
In 2023, the company's thermal power plant completed quota payment for the second performance cycle and obtained 146 million yuan in carbon quota transaction revenue.
Risk warning: The increase in coal prices exceeded expectations, the number of hours used fell, and the progress of projects under construction fell short of expectations.