Core views
In 2023, the company achieved operating income of 29.142 billion yuan, an increase of 3.36% year on year; net profit to mother was 3.459 billion yuan, an increase of 219.52% year on year. The year-on-year increase in the company's business performance in 2023 was mainly affected by falling coal prices, increased power generation, and increased capacity of new energy engine assembly machines. 2024Q1 achieved operating income of 8.071 billion yuan, an increase of 10.87% year on year, and net profit of 1,159 billion yuan, an increase of 57.96% year on year, mainly due to continuous improvement in coal combustion costs combined with a year-on-year increase in power generation. The company completed a power generation capacity of 15.542 billion kilowatt-hours in 2024Q1, an increase of 15.9% over the previous year. The average feed-in price was 0.515 yuan/kilowatt-hour (tax included). Among them, coal power, gas power, wind power, and photovoltaics (including distributed) were 113.16, 21.21, 15.15, and 590 million kilowatt-hours, respectively. The company's new energy power generation business continues to grow, and thermal power profits continue to rise. Combined with the performance resilience brought about by the company's diversified asset layout, future business performance is expected to grow steadily. The company's historical dividend level is high. With the steady improvement of business performance, the undervalued nature of high dividends has become more and more prominent.
occurrences
The company released the 2023 annual report and the report for the first quarter of 2024. In 2023, the company achieved operating income of 29.142 billion yuan, an increase of 3.36%; net profit to mother of 3.459 billion yuan, an increase of 219.52%; net profit after deducting non-return to mother of 3.084 billion yuan, an increase of 271.42%; achieved a weighted return on net assets of 10.75%, an increase of 7.22 percentage points; and achieved basic earnings per share of 0.71 yuan/share, an increase of 221.27% year on year.
2024Q1 achieved operating income of 8.071 billion yuan, up 10.87% year on year; net profit to mother was 1,159 billion yuan, up 57.96% year on year.
Brief review
Coal-burning costs continued to improve, and net profit to mother increased in 24Q1
In 2023, the company achieved operating income of 29.142 billion yuan, an increase of 3.36% year on year; net profit to mother was 3.459 billion yuan, an increase of 219.52% year on year. The year-on-year increase in the company's business performance in 2023 was mainly affected by falling coal prices, increased power generation, and increased capacity of new energy engine assembly machines. By business, the company's coal power, gas power, wind power, photovoltaics, oil and gas pipeline transmission and coal sales business achieved operating income of 130.91, 59.18, 27.02, 9.37, 28.20, and 3,013 billion yuan respectively, with year-on-year changes of -0.93%, +31.74%, +2.67%, +16.24%, +23.56% and -35.2%; achieving gross profit margins of 10.68%, 12.83%, 51.86%, 47.91%, 27.65% and 2.4% year-on-year changes -4.86, -5.32, -5.18, and +1.18 percentage points. 2024Q1 achieved operating income of 8.071 billion yuan, an increase of 10.87% year on year, and net profit of 1,159 billion yuan, an increase of 57.96% year on year, mainly due to continuous improvement in coal combustion costs combined with a year-on-year increase in power generation. With 2024Q1, the company completed 15.542 billion kilowatt-hours of power generation, an increase of 15.9% over the previous year. In terms of the cost rate for the period, the 2023 company's management expense rate, R&D expense ratio, and financial expense ratio were 3.25%, 0.06%, and 4.06%, respectively, with year-on-year changes of -0.51, -0.01, and -0.39 percentage points; the 2024Q1 company's management expense ratio, R&D expense ratio, and financial expense ratio were 2.24%, 0.01%, and 3.82%, respectively, with year-on-year changes of +0.17, -0.03, and -0.17 percentage points.
In 2023, the company achieved investment income of 1,567 billion yuan, an increase of 476.16% over the previous year; the company plans to pay a cash dividend of 0.40 yuan (tax included) per share, with a cash dividend ratio of 56.60%.
New energy installations continue to grow, and feed-in tariffs remain high
As of March 31, 2024, the company's holding installed capacity was 16.9471 million kilowatts, an increase of 5.16% over the previous year. Among them: coal power 8.4 million kilowatts, accounting for 49.57%; gas and electricity, 3.425,600 kilowatts, accounting for 20.21%; wind power, 2.3866 million kilowatts, accounting for 14.08%; photovoltaic power generation, 2.1306 million kilowatts, accounting for 12.57%; distributed power supply 60.44 million kilowatts, accounting for 3.57%. In 2023, the company achieved 55.111 billion kilowatt-hours of power generation, an increase of 2.6% over the previous year, the average feed-in price was 0.523 yuan/kilowatt-hour (tax included), and participated in market transactions of 41,155 billion kilowatt-hours. Among them, coal, gas, wind power and photovoltaic (including distributed) power generation were 402.01, 71.76, 52.57, and 2,477 billion kilowatt-hours, respectively, with year-on-year changes of -1.7%, +28.8%, +1.88%, and +17.56%. The company completed a power generation capacity of 15.542 billion kilowatt-hours in 2024Q1, an increase of 15.9% over the previous year. The average feed-in price was 0.515 yuan/kilowatt-hour (tax included), and participated in market transactions of 11.573 billion kilowatt-hours. Among them, coal power, gas power, wind power, and photovoltaics (including distributed) were 113.16, 21.21, 15.15, and 590 million kilowatt-hours, respectively, up 10.0%, 71.2%, 8.2%, and 21.9% year-on-year. Benefiting from tight electricity supply and demand in Jiangsu, Zhejiang and Shanghai, the company's 2024Q1 feed-in tariffs remained high.
Feed-in prices are expected to remain high, and the high dividend undervaluation attributes are prominent. In terms of maintaining “buy” feed-in tariffs, considering the strong demand for electricity consumption in the Yangtze River Delta region and the overall tight electricity supply and demand, Shanghai electricity prices are expected to remain stable after capacity-inclusive electricity prices. The company's feed-in tariffs are expected to maintain a high level in 2024, compounded by continuous improvements in coal-burning costs, and thermal power profitability is expected to continue to rise. The company's new energy power generation business continues to grow, and thermal power profits continue to rise. Combined with the performance resilience brought about by the company's diversified asset layout, future business performance is expected to grow steadily. The company's historical dividend level is high. With the steady improvement of business performance, the undervalued nature of high dividends has become more and more prominent. We expect the company's net profit to be 4.185 billion yuan, 4.478 billion yuan, and 4.670 billion yuan respectively from 2024 to 2026, corresponding to EPS of 0.86 yuan/share, 0.91 yuan/share, and 0.95 yuan/share, maintaining a “buy” rating.