1H24 wind power generation fell 3.6% year on year
Due to pressure on wind resources, 1H24 wind power generation fell 3.6% year over year to 7,444 GWh. On a quarterly basis, power generation in the second quarter decreased by 7.96% year on year, and increased by 0.4% year on year in the first quarter. We expect FY24-26 wind power generation to increase by 5.6%, 15.2%, and 20.6% year-on-year to 14,867 GWh, 17,128 GWh, and 20,656 GWh, respectively.
1H24 natural gas sales increased 46.5% year over year
As demand was higher than expected, 1H24's natural gas sales increased 46.5% year over year to 3.02 billion cubic meters. Among them, wholesale and retail sales increased 10.6% and 16.1% year over year to 1.23 billion cubic meters and 1.06 billion cubic meters, respectively. Based on the steady success of the first phase of the Tangshan LNG project in June last year, LNG gas volume increased 27,186.0% year over year to 0.69 billion cubic meters. On a quarterly basis, natural gas sales rose 62.6% year on year in the second quarter, up from 39.4% in the first quarter. We expect the company's FY24-26 gas sales to increase by 34.3%, 18.2%, and 10.3% year-on-year to 6.05 billion, 7.15 billion, and 7.89 billion cubic meters, respectively.
Adjust profit forecasts
However, the rise in natural gas sales still cannot fully offset the impact of the decline in wind power generation, because the gross margin of the new energy sector has always been higher than that of the natural gas sector (for example, FY23, the former is 59.0%, while the latter is 9.9%). We lowered the FY24-25 shareholders' net profit forecast by 5.5% and 9.8% respectively, and added the FY26 forecast.
Maintain a “buy” rating
Rolling to 5.2 times the 2025 target price-earnings ratio, we adjusted the target price for H shares from HK$4.00 to HK$4.15 accordingly.
The upside contracted to 21.3%. However, it is still possible to maintain a “buy” rating.
Risk warning: (1) risk of accounts receivable, (2) sharp drop in grid-connected electricity prices, and (3) rising natural gas costs.