Incident: In 2023, the company achieved operating income of 26.485 billion yuan, yoy +11.23% (after adjustment); realized net profit of 7.181 billion yuan, yoy +0.94% (adjusted); weighted average ROE was 8.99%, a year-on-year decrease of 0.65 pcts; basic EPS was 0.251 yuan, yoy +0.88%. 2024Q1, the company achieved operating income of 7.899 billion yuan, yoy +15.26% (after adjustment); realized net profit of 2,422 billion yuan, yoy +0.10% (after adjustment).
The installed capacity is growing rapidly, and the reserve project is sufficient
In 2023, the company added 13.5356 million kilowatts of installed capacity, including 3.494 million kilowatts of wind power (616,000 kilowatts of sea wind), 9.540 million kilowatts of PV, and 5010,000 kilowatts of other installed capacity, with a total installed capacity of 40.44 million kilowatts. The new installed capacity of wind power, sea wind, and photovoltaics accounted for 4.6%, 9.02%, and 4.41% of the country's new installed capacity, respectively. In terms of reserve projects, the installed capacity of the company's projects under construction was 18.768 million kilowatts in 2023, and the installed capacity of the new approved/registered project was 264.992 million kilowatts. The company is expected to maintain a high installed growth rate in the next 2-3 years.
Revenue grew steadily, and wind power profitability declined slightly
In 2023, the company's revenue increased 11.2% year on year, mainly benefiting from the company's new projects being put into operation for electricity generation. The gross sales margin and net interest rate were 55.1% and 31.2% respectively, down 3.3 pct and 4.0 pct year on year. The main reasons were: 1) depreciation of new grid-connected projects and increased project operating costs; 2) Production safety expenses began to be calculated in December 2022; 3) Affected by fluctuations in the operation of participating companies, the net investment income decreased by 632 million yuan, yoy -47.5% year on year. In terms of power sources, the company's gross margins for wind power and photovoltaics in 2023 were 56.9% and 53.2% respectively, a year-on-year decrease of 4.6 pcts and remained flat.
2024Q1, the company's revenue increased 15.3% year on year. The main reasons were 1) the increase in the company's new installed equipment, and the increase in feed-in power and revenue; 2) the company's wind and light project resources were better than in the same period last year. Net profit attributable to mother remained flat. The main reason was the increase in depreciation and operating costs over the same period last year due to the increase in new installed equipment, and the increase in profit and loss attributable to minority shareholders.
Electricity prices fell slightly, and operating cash flow increased markedly in 24Q1
The average electricity price (excluding tax) of the company in 2023 was 0.4923 yuan/kilowatt-hour and 0.4927 yuan/kilowatt-hour, respectively, down 4.2% and 0.5% year-on-year, respectively. We believe that the decline in electricity prices was mainly due to an increase in the proportion of installed capacity in affordable projects. The company's net operating cash flow in 2023 was 14.42 billion yuan, yoy -14.23%, mainly due to a year-on-year decrease in the additional recovery amount of renewable energy electricity prices for new energy projects. 2024Q1's net operating cash flow was 4.42 billion yuan, yoy +18.7%. The main reason was the increase in electricity revenue due to the increase in installed capacity of the project.
Investment advice: The real yield of green power industry projects is expected to stabilize, the company has sufficient reserve projects, and there is plenty of room for long-term growth. The company is expected to achieve operating income of 338.08, 401.29, and 45.676 billion yuan in 2024-2026, and net profit to mother of 87.35, 101.7, and 11.4.7 billion yuan, up 21.6%, 16.4%, and 12.8% year-on-year. The corresponding EPS is 0.31, 0.36, and 0.4 yuan, and the corresponding PE multiples are 15.4, 13.2, and 11.7X, maintaining the “gain” rating.
Risk warning: risk of wind falling short of expectations, risk of falling electricity consumption, risk of falling electricity prices due to marketization of electricity, risk of untimely payment of subsidies, risk of poor installed capacity growth, natural disasters.