The 2023 dividend ratio reached 55%, and the 2024 results are expected to increase significantly year-on-year. The company's 2023 operating income/net profit to mother is 567.1/6.705 billion yuan (in the upper range of 57.05 to 6.842 billion yuan), +15.4%/+66.1% (adjusted caliber); 1Q24 achieved revenue/net profit to mother of 141.1/2.04 billion yuan, and +26.1% year-on-year, mainly due to the year-on-year decline in coal prices, which led to a year-on-year increase in thermal power profits. The company's 23-year DPS was 0.4948 yuan, corresponding to a dividend payout rate of 55%. We expect the company's net profit to be 85.5/96.8/10.39 billion yuan in 24-26 (previous value: 85.7/94.5/- billion yuan). Based on 24E Thermal Power's net assets/Clean Energy's net profit of 5.75/ 7.333 billion yuan, with reference to the coal-power/clean energy comparison company 24E PB/PE Wind's consistent forecast of 1.14/18.0x, considering that COFCO has a new energy asset valuation forecast and the future water landscape growth of Yalong River Hydropower, the company was given 1.05/19.5x 24E PB/PE, with a target market value of 149 billion yuan and a target price of 19.99 yuan (previous value 17.36 yuan), “buy”.
Net profit from coal-fired electricity reached 2.3 points in 2023, adding 2,432,400 kilowatts of new energy installed capacity in 2023. The company's thermal power feed-in capacity was +15.3% year-on-year to 54.559 billion kilowatt-hours. According to the net profit and shareholding ratio estimates of the five fire electronics companies disclosed by the company, the company's net profit/net profit to mother in 2023 was 1,429/835 million yuan, corresponding to 2.6/1.5 points of net profit from thermal power generation and net profit to mother. Among them, Qinzhou Thermal Power's net profit for 2023 was as high as 6.3 points. Qinzhou Phase III Unit 1/2 was put into operation on 2023/12/31 and 2024/4/29. The new production capacity of the high-profit power plant is expected to drive profit growth in the company's thermal power sector. In 2023, the company added 23.31/219.93 million kilowatts of wind/photovoltaic installations. By the end of 2023, the company's wind/photovoltaic installed capacity reached 318.25/3.85533 million kilowatts. The company's annual report revealed the capital expenditure of the 2024 capital investment plan of 34.65 billion yuan.
We continue to be optimistic that the volume and price of hydropower in the Yalong River will rise sharply, and the integrated water and landscape development will be the icing on the cake. The Yalong River hydropower feed-in capacity was -4.86% to 83.766 billion kilowatt-hours, but the average feed-in price was +11.11% to 0.310 yuan/kWh, mainly due to the rise in electricity prices delivered by Jinguan power pack to Jiangsu and the market-based electricity price of hydropower in Sichuan Province; therefore, the net profit of Yalong River Hydropower in 2023 was +17.65%. In 1Q24, Yalong River Hydropower's feed-in capacity was -8.25% to 19.516 billion kilowatt-hours, but feed-in tariffs were +4.46% to 0.328 yuan/kilowatt-hour, and net profit to mother was +4.5% YoY to 2.57 billion yuan, contributing 57.78 million yuan to SDIC Power's net profit to mother year on year. I am optimistic that the construction of an integrated clean energy base with water and landscape of the Yalong River will bring the company an increase in production capacity, and the joint scheduling and power generation benefits of the two estuaries will be further exploited.
Risk warning: The rise in incoming shui/Liangyang power generation/market-based electricity prices fell short of expectations; the increase in coal prices exceeded expectations.