Core views:
Operation was stable, investment income increased, and Q1 net profit to mother was +2.5% year-on-year. 2024Q1 achieved operating income of 9.887 billion yuan (+0.1% YoY) and net profit to mother of 2,393 billion yuan (+2.5% YoY). Increased demand and installed capacity led to an increase in thermal power and photovoltaic power generation. Revenue from the coal-power/photovoltaic segment was +3.3%/+146.5%, respectively. The number of hours used by wind power declined, and electricity volume increased slightly due to the expansion of installed capacity, but electricity prices declined, and segment revenue was -4.7% year-on-year. The company's operating profit was stable, and investment income increased by 138 million yuan over the same period last year, which led to an increase in performance.
The increase in thermal power and photovoltaic power generation led to an 8.3% year-on-year increase in Q1 power generation. 24Q1 achieved a power generation capacity of 21.225 billion kilowatt-hours (+8.3% year over year), of which: wind power generation capacity was 17.031 billion kilowatt hours (+1.4% year over year), and the main system added 1.59 GW of installed capacity, of which 24Q1 added 0.03 GW, and the number of hours used decreased by 2.5% year on year; thermal power generation capacity of 2,581 billion kilowatt-hours (+11.3% year over year), mainly due to the increase in electricity demand in Jiangsu Province; other renewable energy generation capacity was 1,613 billion kilowatt-hours (+233% year over year), mainly due to the increase in electricity demand in Jiangsu Province; the main system 3.46 GW of PV installations were added, of which 0.54 GW was added in 24Q1, and 6.50 GW of other renewable energy sources were installed at the end of March. Due to the increase in affordable projects and the increase in the proportion of marketization, wind and power prices have all been reduced.
The installation is accelerated and the Group's asset integration space is taken into account, and the company has broad room for growth. According to the company's financial report, in 2023, the company achieved a development target of 22.75 GW, of which 5.07 /14.77/2.38/0.53GW for wind power/photovoltaic/pumped energy storage/energy storage, respectively. Wind power may cause short-term asset impairment from generation to generation, but old projects are mainly located in regions with abundant wind resources, and replacing fans will bring about both improvements in installed capacity and efficiency. In 2024, the company plans to start construction of 10 GW of new energy installed and 7.5 GW connected to the grid.
Profit forecasting and investment advice. The company's net profit from 2024 to 2026 is estimated to be 78.6/88.7/9.92 billion yuan, respectively, and the PE corresponding to the latest closing price is 19.1/16.9/15.1 times, respectively.
The landscape is being installed at an accelerated pace, and there is plenty of room for growth. Referring to peer valuation, the company was given a PE valuation of 20 times in 2024, corresponding to a reasonable value of 18.81 yuan/share, and an 8 times PE valuation for H shares, corresponding to a reasonable value of HK$8.12 per share for H shares, maintaining a “buy” rating.
Risk warning. System adjustment costs have increased; project construction has fallen short of expectations; abandonment of wind and light has increased.