Core views
In 2023, the company achieved operating income of 23.461 billion yuan, a year-on-year decrease of 0.51%; realized net profit to mother of 7.638 billion yuan, an increase of 5.58% over the previous year. Affected by the incoming water situation, the company's annual power generation decreased by 4.04% year on year in 2023, but the average settled electricity price (tax included) increased by 2.96% year on year, and operating income remained basically the same year on year. In Q1 2024, the company achieved operating income of 4.420 billion yuan, an increase of 3.58% over the previous year, and achieved net income to mother of 1,065 billion yuan, an increase of 17.25% over the previous year. The increase in net profit due to the year-on-year increase in consolidated settlement electricity prices for the current period compared to the previous year, the year-on-year increase in operating income, the reduction in the financing cost ratio for interest-bearing debt in the current period, and the year-on-year decrease in financial expenses. By the end of 2023, the company had put into production 255.998 million kilowatts of hydropower and 1,9281 million kilowatts of new energy. In 2023, the company completed 106.235 billion kilowatt-hours of feed-in electricity, a year-on-year decrease of 4.05%. It is mainly affected by incoming water conditions and water storage. The company relies on the Lancang River basin to develop renewable energy. The installed capacity is expected to grow steadily in the future, and the space for performance growth is expected to continue to expand.
occurrences
Company Releases Report for the First Quarter of 2023 2024
In 2023, the company achieved operating income of 23.461 billion yuan, a year-on-year decrease of 0.51%; realized net profit of 7.638 billion yuan, a year-on-year increase of 5.58%; net profit after deducting non-return on mother of 7.120 billion yuan, up 8.35% year on year, weighted average return on net assets was 10.50%, down 0.04 percentage points year on year; basic earnings per share was 0.40 yuan/share, up 8.11% year on year.
In Q1 2024, the company achieved operating income of 4.420 billion yuan, an increase of 3.58% over the previous year, and achieved net income to mother of 1,065 billion yuan, an increase of 17.25% over the previous year.
Brief review
Net profit to mother grew steadily, and financial costs improved markedly
In 2023, the company achieved operating income of 23.461 billion yuan, a year-on-year decrease of 0.51%; realized net profit to mother of 7.638 billion yuan, an increase of 5.58% over the previous year. Affected by the incoming water situation, the company's annual power generation decreased by 4.04% year on year in 2023, but the average settled electricity price (tax included) increased by 2.96% year on year, leaving operating income basically flat year on year. In Q1 2024, the company achieved operating income of 4.420 billion yuan, an increase of 3.58% over the previous year; net income to mother was 1,065 billion yuan, an increase of 17.25% over the previous year. The increase in net profit due to the year-on-year increase in consolidated settlement electricity prices for the current period compared to the previous year, the year-on-year increase in operating income, the reduction in the financing cost ratio for interest-bearing debt in the current period, and the year-on-year decrease in financial expenses. In terms of the period expense ratio, the 2023 company's sales expense ratio, management expense ratio, R&D expense ratio, and financial expense ratio were 0.26%, 2.31%, 0.80%, and 11.64%, respectively, with year-on-year changes of +0.03, +0.15, +0.01, and -1.85 percentage points. The company's financial expense ratio improved year-on-year, mainly due to the company's continuous optimization of the debt financing structure and implementing cost control methods such as early replacement of existing debt with low-interest capital. The financing cost decreased by 60 basis points over the same period last year. In terms of cash flow, in 2023, net cash flows from the company's operating activities, investment activities, and financing activities were 170.63 billion yuan, -265.67 billion yuan, and 8.70 billion yuan, with year-on-year changes of -3.93%, -177.66%, and +207.76%. In 2023, the company plans to pay a cash dividend of 0.18 yuan (tax included) per share, accounting for 42.42% of net profit attributable to mother.
Incoming water is expected to improve during the flood season, and the amount of feed-in electricity is expected to increase
By the end of 2023, the company had put into production an installed capacity of 275.279 million kilowatts, including 255.998 million kilowatts of hydropower and 1,9281 million kilowatts of new energy. In 2023, the company completed 107.062 billion kilowatt-hours of power generation, a year-on-year decrease of 4.04%, and feed-in electricity capacity of 106.235 billion kilowatt-hours, a decrease of 4.05% over the previous year. The main reasons for the year-on-year decrease in power generation in 2023: First, cascade energy storage in the Lancang River Basin decreased by 6.137 billion kilowatt-hours year on year in early 2023, and the power generation capacity decreased by 25.44% year on year; second, in July-September, incoming water from the Lancang River Basin was 4-70% higher year on year. In the third quarter, power generation increased 7.875 billion kilowatt-hours year on year, an increase of 27% over the previous year; third, according to power grid scheduling arrangements, the “two banks” of Xiaowan and Nuozadu were transferred to water storage operation at the end of the flood. Yes, not fully released. In 2024, Q1 completed power generation of 16.226 billion kilowatt-hours, a year-on-year decrease of 7.17%, and feed-in power of 16.058 billion kilowatt-hours, a decrease of 7.25% over the previous year. The year-on-year decline in the company's Q1 feed-in power generation was mainly due to large-scale commissioning of Yunnan New Energy and the maintenance of large-scale thermal power generation in the province, squeezing hydropower generation space; and incoming water from the Lancang River basin remained flat year on year in the first quarter. The two major reservoirs, Xiaowan and Nuozadu, undertook grid system adjustment tasks, and cascade energy storage was not fully released (4.4 billion kilowatt-hours more than the previous year), compounded by the fact that water storage at the Toba Hydropower Station affected part of the power generation capacity. Due to the impact of this year's El Niño phenomenon and the low base figure in 2023, we expect the incoming water situation to improve during the flood season this year, and the company's feed-in power supply is expected to increase year-on-year.
Integrated development of wind, light and water storage, maintaining a “buy” rating
The company promoted a development line for the integrated development of the Lancang River scenery and water storage at full speed, adhering to the two priorities of hydropower and new energy development. In terms of hydropower, the company strengthened the creation of quality hydropower units. The number of premium hydropower units reached 59, an increase of 21.7% over the previous year. Eight hydropower plants, including Nuozadu and Wulonglong, achieved “zero non-stop” for 4 consecutive years. In terms of new energy, the company actively carries out the sustainable development of “integrated landscape and water storage” under the guidance of the strategic goal of “carbon peak and carbon neutrality”.
In 2023, the company's total capital expenditure was 28.486 billion yuan, mainly used for the construction of RM hydropower, Toba hydropower station, and the Jiaoliangbao hydropower project, the construction of new photovoltaic projects, the preparation of hydropower projects in the upper reaches of the Lancang River, and the acquisition of 100% of Huaneng Sichuan Company's shares. The company relies on the Lancang River basin to develop renewable energy. The installed capacity is expected to grow steadily in the future, and the space for performance growth is expected to continue to expand. We expect the company's net profit to be 8.460 billion yuan, 8.753 billion yuan, and 9.069 billion yuan respectively from 2024 to 2026, corresponding to EPS of 0.47 yuan/share, 0.49 yuan/share, and 0.50 yuan/share, respectively.