Incidents:
The company published its 2023 annual report and 2024 quarterly report. In 2023, we achieved operating income of 78.11 billion yuan, an increase of 13.4% year on year; net profit to mother was 27.24 billion yuan, up 14.8% year on year; in the first quarter of 2024, we achieved operating income of 15.64 billion yuan, up 1.58% year on year; and net profit to mother was 3.97 billion yuan, up 9.8% year on year.
The company's 2023 profit distribution plan: It is proposed to distribute a cash dividend of RMB 0.82 (tax included) per share, with a cash dividend ratio of 73.66%.
Wubai injection+overseas business profit increased. Net profit returned to mother increased 14.8% year-on-year in January 2023. In January 2023, the company completed the acquisition of Wudongde and Baihetan power plants. Currently, the total installed hydropower capacity is 71.755 million kilowatts, and its hydropower installed capacity in China is 71.695 million kilowatts, accounting for 17.01% of the country's hydropower installations.
In terms of power generation, due to the year-on-year decline in incoming water in the second quarter of 2023, the six cascade power plants in the company generated a total of 276.263 billion kilowatt-hours throughout the year, an increase of 5.34% over the previous year. We believe that the increase in profit after the injection of the Wudongde and Baihetan power plants has not been fully released. In terms of cascade scheduling, the “integrated regulation and control” management of cascade power stations in the lower reaches of the Jinsha River has been fully implemented to achieve zero waste water loss throughout the year. Cascade power plants save water and increase power generation by 12.13 billion kilowatt-hours throughout the year. In terms of energy storage, according to the company's announcement, the company's energy storage increased by more than 9 billion kilowatt-hours at the end of October 2023.
Furthermore, in 2023, due to significant increases in sales volume and distribution prices of Luthers' electricity, the company's overseas business growth rate was impressive. According to the company's annual report, the net profit of the subsidiary Changdian International Co., Ltd. reached 1.45 billion yuan in 23, an increase of 75.4% over the previous year.
Performance maintained positive growth against the backdrop of declining power generation in 24Q1
In Q1 2024, due to the year-on-year drying of incoming water and the maintenance of delivery channels, the six cascade power plants in the company's territory generated about 52.75 billion kilowatt-hours, a decrease of 5.1% over the previous year. Against the backdrop of a decrease in power generation, the company's Q1 performance increased 9.8% year over year. We believe the main reasons include:
① Financial cost pressure drop: The company's financial expenses in Q1 were 2.85 billion yuan, a year-on-year decrease of 296 million yuan; ② Investment income growth: The increase in the Q1 performance of major participating thermal power companies led the company's net investment income in Q1 to reach 900 million yuan in Q1, an increase of 322 million yuan over the previous year.
The dividend per share remains relatively stable
According to the company's 2023 profit distribution plan, the company plans to pay a dividend of 0.82 yuan/share in 2023, with a cash dividend ratio of 73.66%. The total profit distributed in 2022 was 20.092 billion yuan (corresponding to 23.546 billion shares). If calculated based on the total share capital of 24.468 billion shares, the revised dividend per share for 2022 is 200.92/244.68 = 0.82 yuan/share, which is consistent with the proposed dividend amount per share for fiscal year 23, and the company's dividend per share remains relatively stable.
Profit forecast and valuation: Taking into account the impact of unstable factors such as incoming water, the company is expected to achieve net profit of 328.1/358/37.85 billion yuan in 2024-2026 (343.6/36.66 billion yuan before 24/25), and the corresponding PE is 18.9/17.3/16.4x, respectively, maintaining a “buy” rating.
Risk warning: risks such as falling rainfall and incoming water falling short of expectations, electricity prices fluctuating beyond expectations, and falling short of expectations in the construction of power storage plants