Introduction to this report:

The company's 1Q24 performance growth was mainly due to increased return on investment. Wind power is under pressure in the short term, and there is plenty of room for long-term growth.

Key points of investment:

Maintaining the “gain” rating: The company has abundant reserves of new energy projects and broad scope for long-term growth. It maintains an EPS of 0.95/1.13/1.28 yuan from 2024 to 2026, maintains a target price of 21.5 yuan, and maintains a “gain” rating.

The performance was in line with expectations. The company's 1Q24 revenue was 9.88 billion yuan, +0.1% year-on-year; net profit to mother was 2.39 billion yuan, +2.5% year-on-year, and the performance was in line with expectations.

The increase in 1Q24 performance was mainly due to increased return on investment. 1Q24 added 562,000 kilowatts of installed capacity, including 2.6/536 million kilowatts of wind power/photovoltaics (including new acquisitions). 1Q24 generated 21.2 billion kilowatt-hours, +8.3% year-on-year. The company's 1Q24 gross profit margin was 39.9%, -0.1 ppts year on year; net profit was 2.66 billion yuan, +1.2% year over year. We believe that the increase in the company's 1Q24 performance is mainly related to the increase in investment income: 1Q24 investment income of 0.7 billion yuan, +140 million yuan year-on-year.

Wind power is under pressure in the short term, and there is plenty of room for long-term growth. 1Q24 wind power generation was 17 billion kilowatt-hours, +1.4% year over year. We believe that in the context of installed capacity growth, the low increase in wind power generation is mainly related to a decrease in wind speed (640 hours of wind power utilization in 1Q24, -14 hours year on year). 1Q24 wind power revenue was 7.88 billion yuan, -4.7% year-on-year. We speculate that it is related to the increase in market-based transactions and the decline in wind power prices. Along with the gradual advancement of “big generation to small”, the company's wind power installed capacity and utilization hours are expected to increase, and long-term power generation capacity will increase; combined with abundant project reserves (54 GW of additional resource reserves in 2023, 23 GW of development targets were obtained), we believe that the company has broad room for long-term growth.

Risk warning: New energy installations are lower than expected, electricity prices are below expectations, etc.