Incident: Recently, the company disclosed its 2024 quarterly report. 24Q1 achieved revenue of 30.952 billion yuan, a year-on-year decrease of 3.21%; realized net profit to mother of 1,862 billion yuan, an increase of 64.21% over the previous year.
Comment:
In 24Q1, the company's hydropower generation growth rate was relatively fast year-on-year. 24Q1 completed 56.164 billion kilowatt-hours of power generation, a year-on-year decrease of about 0.19%. Among them, the generation capacity of coal/gas/hydropower was 508.63/42.89/1,011 billion kilowatt-hours respectively, a year-on-year change of -1.02%/+5.38%/+24.81%, and hydropower generation capacity grew rapidly year on year.
Lower coal prices contributed to a year-on-year increase in the company's net profit to mother. The 24Q1 company completed 52,477 billion kilowatt-hours of feed-in electricity, a year-on-year decrease of about 0.30%. The 24Q1 company's average feed-in tariff was about 509.31 yuan/megawatt-hour, a year-on-year decrease of 4.06%, leading to a year-on-year decline in the company's revenue. Due to the year-on-year decrease in coal prices, the 24Q1 company's operating costs fell 7.41% year on year, thereby boosting the company's net profit to mother year on year.
24Q1's gross margin was 8.40%, up 4.16 percentage points year on year, mainly due to lower coal prices, etc.; net profit margin was 7.31%, up 3.62 percentage points year on year.
The company took a stake in Huadian New Energy to seize transformation opportunities. The 24Q1 company's investment income was 1,148 billion yuan, a slight decrease over the previous year. The company participated in enterprises such as Yinxing Coal, Huadian Coal, and Huadian New Energy. As one of the first companies to participate in the development and operation of the domestic new energy power generation business, Huadian New Energy has long been deeply involved in the field of new energy power generation, forwardly laid out high-quality resources in the Sanbei region, actively expanded into the Middle East and South regions with consumption advantages, and gradually developed innovative businesses such as “New Energy +” in the southwest region, fully covering regions with abundant domestic landscape resources and strong electricity consumption demand. In 2021-2023, Huadian Xinneng's revenue increased from 21,668 billion yuan to 29.543 billion yuan, with a CAGR of 16.77%; net profit to mother increased from 7.860 billion yuan to 10.110 billion yuan, or 13.41%. Along with the transformation of China's energy structure, Huadian New Energy is growing rapidly. The company's participation in Huadian New Energy will help seize opportunities for energy structure transformation.
Investment advice: The company's EPS is expected to be 0.61 yuan, 0.66 yuan, and 0.72 yuan respectively in 2024-2026, corresponding PE is 11 times, 10 times, and 9 times, respectively, maintaining the company's “buy” rating.
Risk warning: policy progress falls short of expectations; economic development falls short of expectations; risk of feed-in electricity price fluctuations; risk of thermal coal price fluctuations, etc.