New energy led to a significant increase in performance in 2023. In 2023, the company achieved operating income of 74.957 billion yuan (+5.15%) and net profit of 10.624 billion yuan (+17.91%) to mother. The sharp increase in the company's performance was mainly due to the year-on-year increase in the installed capacity of new energy sources and power generation. The annual power generation capacity was 209.858 billion kWh (+5.30%), and the cumulative feed-in electricity volume was 197,449 billion kWh (+5.57%), including 23.382 billion kWh (+66.44%) from new energy sources and 22.91 billion kWh (+66.32%).
2024Q1's operating revenue and net profit to mother rose slightly. In the first quarter of 2024, the company achieved operating income of 17.99 billion yuan (+0.5%) and net profit of 3.06 billion yuan (+1.2%) to mother. In the first quarter of 2024, the company's cumulative power generation capacity was 51.09 billion kWh (+2.8%), with feed-in power generation increasing year-on-year in Qinshan and minor repairs to Fuqing Unit 4. The total nuclear power generation capacity was 43.67 billion kWh (-3.1%), and feed-in electricity capacity was 40.89 billion kWh (-3.2%).
The number of approved units continues to increase, and the commissioning period for nuclear power is approaching. Since 2019, the company has obtained approval for a total of 15 units, and more than 10 nuclear power units are undergoing preliminary preparations. In 2024 and 2025, units 1 and 2 in Zhangzhou will be put into operation, and in 2026, Tianwan 7 and Xiaodui in Hainan will be put into operation. In 2027, the company will enter peak production period. Tianwan 8, Sanmen 3, 4, and Xudabao 3 and 4 are all scheduled to be put into operation in that year, with a total installed capacity of 6.315 million kW.
CNNC's performance continues to grow, issuing REITs to revitalize existing new energy assets. In 2023, CNNC had revenue of $9,935 billion (+51.56%), net profit of $2,941 billion (+66.57%), and an average ROE of 11.49%. CNNC Huineng plans to promote the issuance of wind power and photovoltaic REITs. The distribution scale will not exceed 7.5 billion yuan. The underlying assets were initially determined to be 24 wind power and photovoltaic assets, with a total installed capacity of 1.120,500 kW. In addition, China Nuclear Power Group, the controlling shareholder, entrusts 57.65% of the shares and management rights of Xinhua Hydropower Co., Ltd. to the company.
Investment plans have been increased, and dividends have been stabilized to return investors. The company's total investment plan for 2024 was $121.55 billion, an increase of 51.9% year-on-year over the total plan for 2023. In 2023, the company plans to pay a cash dividend of 0.195 yuan/share (tax included), with a dividend ratio of 35.20%. The dividend rate corresponding to the stock price at the end of 2023 is 2.6%, and the dividend rate corresponding to the closing price of May 6, 2024 is 2.1%.
Risk warning: Project construction falls short of expectations, electricity price cuts, policy changes.
Investment advice: Adjust profit forecasts and maintain a “buy” rating. The company's net profit for 2024-2026 is estimated to be 115.1/127.8/14.05 billion yuan (the original 2024-2025 was 115.2/13.23 billion yuan, with an additional 2026 forecast), with a year-on-year growth rate of 8.4%/11.0%/9.9%; earnings per share were 0.61/0.68/0.74 yuan, corresponding to the current PE of 15/14/12x, maintaining a “buy” rating.