Description of the event

The company announced its 2024 interim results forecast: in the first half of 2024, the company achieved operating income of 26.472 billion yuan, an increase of 24.18% over the previous year; the profit attributable to equity holders was 2.802 billion yuan in net profit, an increase of 51.50% year on year.

Incident comments

Driven by high hydropower generation combined with the injection of assets, the recovery of performance in the first half of the year accelerated. In the first half of 2024, thanks to the steady restoration of incoming water, the company's hydropower sales reached 10.675 billion kilowatt-hours, an increase of 89.85% over the previous year, and the hydropower business model determined that its cost did not change much. Although electricity prices fell 11.84 yuan/megawatt-hour year on year to 251.81 yuan/megawatt-hour, high electricity generation led the company's hydropower sector to achieve a net profit of 0.766 billion yuan in the first half of the year. The year-on-year increase was as high as 621.90%, turning a loss into profit. The net profit of hydropower electricity was restored to 0.07 yuan/kilowatt-hour; wind power sales were restored to 0.07 yuan/kilowatt-hour; wind power sales were restored. Electricity capacity reached 13.148 billion kilowatt-hours, up 57.54% year on year, and PV sales reached 11.831 billion kilowatt-hours, up 96.67% year on year. The clean energy project acquired by the company in 2023 was combined. The installed scale of new energy increased 9.0428 million kilowatts. The rapid expansion of the installed capacity led to excellent performance of new energy power. The net profit of the company's wind power business reached 1.96 billion yuan, up 34.87% year on year, and the net profit of electricity per watt hour reached 0.149 yuan/kilowatt-hour. A year-on-year decrease of 0.025 yuan/kilowatt-hour; PV net profit reached 1.135 billion yuan, a year-on-year increase of 46.47%, and a year-on-year decrease of 0.033 yuan/kilowatt-hour. The main reason for the decline in PV profit was that new projects were affordable projects, and the cost and electricity prices were lower than subsidized projects, so electricity revenue would decrease somewhat.

Overall, improvements in incoming water led to a significant restoration of hydropower and electricity. Combined with the increase in performance brought about by the injection of new energy assets, the company's clean energy sector performed excellently.

Thermal power's performance was excellent, and the special dividends showed value. In the first half of the year, the company's thermal power sector sold 28.691 billion kilowatt-hours of electricity, an increase of 1.47% over the previous year. Under the impact of large hydropower generation, thermal power generation still achieved steady growth. In terms of electricity prices, the company's coal and electricity prices in the first half of the year were 392.16 yuan/megawatt-hour, a year-on-year decrease of 10.52 yuan/megawatt-hour, so the revenue of the thermal power division fell slightly by 0.58% year on year. However, thanks to the continuous optimization of the coal supply and demand environment since this year, coal prices have declined steadily. The fuel cost per unit of the company's coal and electricity business was 274 yuan/megawatt-hour, a year-on-year decrease of 8.01%. As a result, the company's thermal power business performance continued to improve. In the first half of the year, the thermal power division achieved net profit of 1.108 billion yuan, an increase of 97.23% over the previous year, and the net profit of electricity reached 0.041 yuan/kilowatt-hour, an increase of 0.02 yuan/kilowatt-hour over the previous year, and the operating performance was excellent. Overall, driven by the excellent performance of both clean energy and thermal power, the company achieved profits attributable to equity holders of 2.802 billion yuan in the first half of the year, an increase of 51.50% over the previous year. At the same time, the company stated that in order to celebrate the 20th anniversary of its listing, it will pay a special dividend of 0.05 yuan per share, and the company's articles of association also promise a 50% bottom line dividend. The accelerated restoration of the company's operating performance is expected to translate into rich dividend returns for the company's shareholders, further enhancing the company's investment value.

Investment advice: As the company's flagship listing platform under China Power Investment, the group's asset securitization is expected to accelerate in the future. We continue to be optimistic about the growth value and investment opportunities brought by the company's endogenous and episodic extension. We expect the 2024-2026 results to be 5.004 billion, 6.046 billion, and 7.157 billion yuan, respectively. The corresponding EPS is 0.40 yuan, 0.49 yuan, and 0.58 yuan, respectively, and the corresponding PE is 8.09 times, 6.70 times, and 5.66 times, respectively, and the valuation is sufficient for the cost. Maintain the company's “buy” rating.

Risk warning

1. The risk that the progress and benefits of the commissioning of new construction projects fall short of expectations;

2. Wind conditions and lighting resources fall short of expected risks.