Incident: The company achieved operating income of 18.9.46/6.608 billion yuan in 2023/24Q1; net profit due to mother was 1.67/252 million yuan, up 56.82/ 278.35% year on year; net net deducted from non-return mother 0.07/244 million yuan, up 203.14/ 263.57% year on year; basic EPS was 0.093/0.14 yuan/share, up 57.63/ 277.22% year on year; plans to distribute 0.8 yuan for every 10 shares, for a total of cash dividends for the whole year $145 million, dividend payout ratio of 86.67%.
Comment: The fall in coal prices has led to a recovery in performance. The company achieved revenue of 6.608 billion yuan in 23Q4, up 23.48% year on year, 16.40% month on month, gross profit margin of 13.41%, up 11.34 pcts year on year, down 1.1 pcts month on month, annual gross profit margin of 11.80%, up 1.35 pcts year on year. Profitability increased against the backdrop of a 5.59% drop in average online electricity prices. The main reason was that the company's average comprehensive standard coal unit price in 2023 was 914.04 yuan/ton, a decrease of 5.72% year on year. The company's 2023 sales/management/R&D/finance expense ratio was 0.72/3.83/4.53/ 3.18%, up 0.22/0.69/1.42/-0.65pct year on year, and the cost ratio increased by 1.67 pcts to 12.27% year on year during the period. In 24Q1, it is expected to benefit mainly from the year-on-year decline in coal prices. The gross margin increased by 6.25 pcts to 12.45% year on year, reaching more than 12% for 4 consecutive quarters. If coal prices continue to fall year on year in the future, the company's profitability is expected to continue to increase year on year.
A controlled shareholding in Thermal Power Installation continues to be put into operation. In July and October 2023, the company held two 350,000 kilowatt cogeneration units for the Shouyang Thermal Power Project, and the installed capacity of Thermal Power Holdings reached 9.85 million kilowatts. In January 2024, the company completed the industrial and commercial change registration by purchasing 51% of CCIC's Tangshan Thermal Power 2 x 300,000 kilowatt project in cash. The installed capacity of Thermal Power Holdings was further increased to 10.45 million kilowatts, accounting for about 68% of the equity. In addition, the company's Xibaipo Power Plant Phase IV project 1 x 660 thousand kilowatt project and Renqiu Thermal Power Phase II 2 x 350,000 kilowatt project were approved in March last year. Construction is expected to begin in the second half of this year, or put into operation in 2026. In terms of shareholding, as Huayang Construction Investment Yangquan Thermal Power achieved double investment in the shareholding project last year, the installed capacity of the company's shares in thermal power rose to 3.7 million kilowatts, and the installed capacity of the controlled shares in thermal power reached 10.79 million kilowatts. Furthermore, after participating in the Guoneng Cangdong Phase III and Guoneng Hengfeng Phase II projects, the company's thermal power equity installed capacity will further increase by 990,000 kilowatts. In 2023/24Q1, the company's feed-in electricity volume increased 10.26/ 20.98% year on year, and the number of hours used by thermal power increased by 270 to 4476 in 2023. Against the backdrop of a tight balance between electricity supply and demand in Hebei, the number of hours used by the company's thermal power units may remain high, and feed-in power and revenue are expected to continue to grow as installed capacity increases. In addition to thermal power, the company is operating/construction/obtaining 30.6/80/1.065 million kilowatts of new energy installed capacity.
Profit forecast: In 2024-2026, the company's revenue is expected to be 203/200/202 billion yuan, net profit to mother of 615/7.38/827 million yuan, EPS 0.34/0.41/0.46, corresponding to PE 20.13/16.77/14.97 times, maintaining the “increase” rating.
Risk warning: Coal prices fell short of expectations, and electricity prices and coal machine usage hours fell short of expectations.