Event: The company released its 2024 semi-annual report. 1H24 achieved operating income of 58.31 billion yuan, up 0.19% year on year; net profit to mother was 3.108 billion yuan, up 104.85% year on year, close to the upper limit of the previous performance forecast, and the performance was in line with our expectations. Among them, 2Q24's revenue was 27.573 billion yuan, down 8.56% year on year; net profit to mother was 1.777 billion yuan, up 28.71% year on year.
The amount of thermal power has declined slightly, and falling costs have opened up profit margins. 1H24 achieved 122.397 billion kilowatt-hours of feed-in electricity, an increase of about 4.43% over the previous year. Among them, in terms of thermal power, the feed-in electricity capacity of coal engines was 88.814 billion kilowatt-hours, a year-on-year decrease of 0.83%; the decline in feed-in electricity for combustion engines was 9.17 billion kilowatt-hours, down 2.22% year on year. The decline in thermal power feed-in power was mainly due to good incoming water conditions in areas rich in hydropower resources in the first half of the year. Combined with the continuous increase in installed capacity of new energy sources in key thermal power business areas, the company's thermal power grid feed-in capacity was squeezed out. In terms of electricity prices, 1H24's average feed-in tariff was 0.46274 yuan/kilowatt-hour (tax included), a year-on-year decrease of 4.70%. The implementation of capacity electricity prices further stabilized thermal power performance. The tightening of electricity supply and demand in some regions also provided some price rigidity for feed-in tariffs. The year-on-year decline in the cost of thermal power was significant. The average price of 1H24 Qinhuangdao 5,500 kcal coal was 876.88 yuan/ton, down 14.1% from 1H23 at 1020.79 yuan/ton.
Hydropower generation has increased rapidly, and installed scenery continues to improve. Affected by the increase in electricity consumption in the whole society, the improvement in incoming water conditions in some hydropower regions, and the continuous increase in the installed capacity of new energy sources, 1H24's hydropower, wind power, and photovoltaic feed-in electricity volumes were 13.243, 8.561, and 2.609 billion kilowatt-hours respectively, which increased 41.34%, 19.92%, and 48.45% year-on-year, respectively, driving the company's total feed-in electricity volume to increase by 0.941 billion yuan to 1.032 billion yuan. 1H24's wind power and photovoltaic installed capacity increased by 0.5643 and 0.4083 million kilowatts respectively, and the share of clean energy installed further increased to 38.8%, an increase of 1.1 pct over the end of last year. In 1H24, the company approved the installed capacity of 1.1093 and 3.6057 million kilowatts of wind power and photovoltaics, and the installed capacity of wind power and photovoltaics under construction was 3.4577 and 2.6654 million kilowatts. The company's new energy installed capacity is expected to continue to accelerate.
The effect of the financial fee reduction was remarkable, and the impairment dragged down the company's performance. 1H24's financial expenses fell by 0.335 billion yuan year on year to 2.621 billion yuan. As of the end of the first half of 2024, the company's perpetual debt balance reached 49.8 billion yuan. Considering the two LPR cuts in February and July 2024, there is room for further decline in the company's annual financial expenses, which continues to unleash the company's performance flexibility. 1H24 accrued asset impairment losses of 0.961 billion yuan, which caused a certain drag on performance. Among them, the company's Huayuan Thermal Power Coal-fired Unit 3 has been shut down, which is expected to reduce the company's net profit to mother by about 0.237 billion yuan in 2024.
Profit forecast and rating: Based on the company's business situation in the first half of the year, we maintain the company's 2024-2026 net profit forecasts of 4.469, 5.331, and 6.519 billion yuan, respectively. The current stock price corresponds to 2024-2026 PE of 11, 9, and 8 times, respectively, maintaining a “buy” rating.
Risk warning: Coal prices fluctuate high, electricity prices fell more than expected, and new energy projects fell short of expectations.