The company released its 2024 quarterly report. The company achieved operating income of 9.887 billion yuan, an increase of 0.10% year on year; net profit to mother was 2,482 billion yuan, up 2.59% year on year, lower than our expectations.
Wind power revenue declined in the first quarter due to poor wind conditions. In 1Q24, the number of hours used by wind power in the country fell 19 hours year on year to 596 hours. Affected by this, the number of hours used by the company's wind power in the first quarter was 640 hours, down 14 hours year on year. Lower wind conditions had an impact on the company's wind power generation efficiency during the same period. Wind power generation in the first quarter was 17.030 billion kilowatts, an increase of only 1.37% over the previous year. Due to the increase in affordable projects and the expansion of the scale of wind power market transactions, the wind power sector's revenue in 2023 was 7.376 billion yuan, down 4.70% year on year. Other renewable energy sources, mainly photovoltaics, benefited from a high increase in installed capacity. PV and other renewable energy generated 1,613 billion kilowatt-hours, an increase of 233.33% over the previous year. Revenue from the Other Renewables segment reached $525 million, up 146.45% year over year. The revenue growth rate of the new energy business, which includes wind power and photovoltaics, is lower than the growth rate of electricity. It is calculated that the company's feed-in electricity volume has declined further, and the new energy performance will continue to be under pressure in the short term.
The high increase in thermal power generation capacity partially offsets the impact of the decline in wind power performance. 1Q24's thermal power generation capacity was 2,581 million kilowatts, an increase of 11.30% over the previous year, and revenue increased 3.3% to 1,976 billion yuan. Although thermal power feed-in electricity prices are expected to drop year on year, combined with the performance of thermal power companies that have already disclosed results, the decline in coal prices in the first quarter was generally lower than the decline in electricity prices. Therefore, we expect the company's thermal power profitability to increase dramatically, partially offsetting the impact of poor wind power business performance.
The performance of the joint venture improved, and the return on investment improved markedly. The company's joint ventures and joint ventures continued to lose money until 2023, resulting in long-term negative investment returns. The company's investment income in the first quarter of 2024 was 69 million yuan, compared to -69 million yuan in the same period in 1Q23. It is expected that the company's two major participating companies, including Jiangsu Nantong Power Generation and Guodian United Power Technology, will reverse losses.
Self-building+mergers and acquisitions, and new energy installations maintain a high growth rate. As of 1Q24, the company's holding installed capacity was 36155.83 MW, of which 27780.64, 1,875, and 6500.19 megawatts of wind power, thermal power, and other renewable energy sources, mainly photovoltaics, were installed. 1Q24 added 562.16 MW of holding installed capacity, including putting into operation 26.25 MW of wind power, 57.51 MW of PV, and acquired 478.40 MW of PV project capacity. Through mergers and acquisitions of project development machines, the company's installed capacity is expected to continue to increase, supporting the company's performance growth in the long term.
Profit forecast and valuation: Based on the company's performance in the first quarter, we maintain the company's net profit forecast for 2024-2026 at 76.35, 82.66, and 9.338 billion yuan. The current stock price is 6.0, 5.5, and 4.9 times PE for 2024-2026, respectively. Maintain a “buy” rating.
Risk warning: wind conditions fall short of expectations, and the return on new projects falls short of expectations