Operating income declined in 2023, and net profit to mother increased significantly year over year. In 2023, the company achieved revenue of 18.669 billion yuan (-9.28%) and net profit to mother of 1,749 billion yuan (+50.41%). The reasons for the decline in the company's operating income are: first, coal trade revenue decreased by 1.88 billion yuan year-on-year due to a decrease in the unit price of coal sales and a decrease in sales volume; second, a decrease in thermal power generation and natural gas sales, which led to a year-on-year decrease of 773 million yuan in the company's revenue. The reason for the sharp increase in the company's net profit due to the year-on-year decline in the unit price of thermal power fuel, the reduction in fuel costs, and the net profit of the company's thermal power business increased by 1,079 billion yuan over the same period last year.
2024Q1 achieved a significant increase in net profit to mother. In the first quarter of 2024, due to an increase in power generation volume due to an increase in incoming water from hydropower compared to the same period last year and the increase in installed capacity of thermal power and new energy power generation, the company achieved operating income of 5.206 billion yuan (+27.19%); during the same period, the company achieved net profit of 780 million yuan (+150.98%). The reason for the sharp increase in the net profit of the company was: First, the water adjustment level increased at the beginning of the year and the profit of the hydropower business increased; second, the installed capacity of coal-fired power generation increased, and the price of thermal power generation decreased year-on-year. Year-over-year improvement.
The incoming water situation is good, and profits from the hydropower business are expected to continue to recover. Since 2024, the incoming water situation in the Qingjiang River Basin has been good. The water level and water storage volume of the company's water distribution and water storage capacity are at a high level, and the incoming water situation is good. It is expected that the company's hydropower business profit will continue to improve. In the future, the company will continue to promote the construction of hydropower projects. Currently, the planned installed capacity of the hydropower project is 4.4 million kilowatts, and the planned installed capacity of the approved hydropower project is 1.8 million kilowatts. The continuous increase in hydropower installed capacity promotes the steady growth of the company's profits.
The construction of new energy projects continues to advance, bringing a source of incremental performance. In 2023, the company added 1.2613 million kilowatts of new energy generation. As of 2023, the total installed capacity of the company's new energy was 4.3845 million kilowatts, including 1,214,900 kilowatts of wind power and 3.1696 million kilowatts of photovoltaic installed capacity.
By the end of 2023, the installed capacity of the company's new energy projects under construction was 2.573,300 kilowatts, including 250,000 kilowatts of wind power and 2,323,300 kilowatts of photovoltaics; at the same time, the installed capacity of new energy approved/registered by the company was 856,300 kilowatts, including 100,000 kilowatts of wind power and 756,300 kilowatts of photovoltaics. In 2024, the company will continue to promote the construction of new energy projects. It is expected that the installed capacity of new energy will continue to increase, and project operation will drive further growth in the company's performance.
Risk warning: incoming water falls short of expectations; coal prices rise; electricity prices fall short of expectations; industry policies fall short of expectations.
Investment advice: Due to improved water intake conditions, hydropower profits have increased, and profit forecasts have been raised. The estimated net profit for 2024-2026 is RMB 27.95/31.55/ RMB 3.559 billion (the original forecast value for 2024-2025 was RMB 25.26/RMB 2,817 billion), with year-on-year growth rates of 59.9%/12.9%/12.8%; EPS is 0.43/0.48/0.55 yuan, respectively, and PE corresponding to the current stock price is 13.2/11.7/10.4x, respectively. In 2024, 14-15 times PE was granted, corresponding to the company's equity value of 391-41.9 billion yuan, corresponding to a reasonable price of 6.00-6.43 yuan/share, with a 6-14% premium over the current stock price. Maintain a “buy” rating.