2023/1Q24 net profit to mother +9%/+15% YoY, lower profit forecast/increase target price
Jingneng Electric Power announced results: In 2023, it achieved revenue of 32.9 billion yuan (+8% year on year after adjustment), net profit of 800 million yuan (+9% after adjustment); 1Q24 achieved revenue of 9.1 billion yuan (+6% year over year), net profit of 4.7 billion yuan (+15% year over year), and profitability continued to recover. Based on the reduced profit forecast for projects under construction and changes in the number of hours used, the net profit for 24-26 is estimated to be 11.9/1,46/1.70 billion yuan (previous value: 14.5/1.58 billion yuan) and BPS 4.18/4.26/4.34 yuan. Comparable companies consistently expected an average PB of 1.2 times. Considering that the company's 2024-2026 net profit CAGR (25%) was lower than the comparable average (30%), the company was given 1.0 times PB in 2024, with a target price of 4.18 yuan (previous value 4.06 yuan), maintaining an “increase” rating.
The commissioning of new units boosted coal power generation. Fluctuations in electricity prices were affected by the spot market, and the company's power generation capacity was +15%/+9% YoY to 912/23.4 billion kilowatt-hours in 2023/1Q24. Demand for the company's generator set continued to pick up; among them, thermal power generation capacity was +14%/+9% year-on-year, mainly due to increased installed capacity, including Jingning Phase II 3 #机组（66 10,000 kilowatts) and Jingtai Phase II #3 #4 units (2x660,000 kilowatts), all of which are expected to be put into operation in 2024. In 2023, the company's average electricity price was -7% to 357 yuan/megawatt-hour. Electricity prices fluctuated along with the market, and the electricity spot market in the main distribution areas of the company's generator sets was fully rolled out. At the end of 2023, coal power projects under construction had an installed capacity of 350,000 kilowatts; sufficient reserve installed capacity, including the Zhuozhou Thermal Power 2 million kilowatt expansion project (land expropriation work has been carried out and is scheduled to be put into operation in 2026) and Qinhuangdao Thermal Power Phase II 2x660,000 kilowatts (approved).
New energy projects have been put into operation one after another, which is expected to contribute to the increase in power generation
The company's 2023/1Q24 new energy generation capacity was 406/166 million kilowatt-hours, +155% year-on-year in 1Q24, mainly due to the increase in installed capacity. Among them, the Hubei Danjiangkou photovoltaic project (98,000 kilowatts) and the Shanxi Changzi County PV project (100,000 kilowatts) were all put into operation in 2023, which is expected to contribute to the increase in 2024.
At the end of 2023, there were 3 new energy projects under construction with an installed capacity of 1.8 million kilowatts. Although the company currently does not account for a high share of new energy electricity, the scale of new energy power is expected to continue to grow dramatically as the projects under construction are put into operation one after another.
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.