Core views

In the first half of 2024, the company achieved operating income of 4.83 billion yuan, a year-on-year increase of 16.25%; net profit to mother was 1.437 billion yuan, an increase of 57.40% over the previous year. The year-on-year increase in the company's revenue in the first half of the year was mainly due to the Hongshui River basin where the company's backbone power plant is located. Incoming water increased a lot year-on-year, and power generation increased year-on-year. At the same time, the decline in coal prices combined with the decline in the company's thermal power generation capacity helped improve the company's operating costs. The company announced the 2024 mid-term profit distribution plan. It plans to distribute a cash dividend of 0.85 yuan (tax included) for every 10 shares, with a total dividend of 0.67 billion yuan, accounting for 46.61% of the net profit attributable to mother in the semi-annual consolidated statement. In the first half of 2024, the company achieved a cumulative total of 17.579 billion kilowatt-hours of power generation, an increase of 19.48% over the previous year. Among them: hydropower 14.397 billion kilowatt-hours, up 27.05% year on year; thermal power 1.627 billion kilowatt-hours, down 25.09% year on year; wind power 1.159 billion kilowatt-hours, up 14.87% year on year; and PV 0.396 billion kilowatt-hours, up 97.75% year on year. Thanks to the year-on-year improvement in incoming water from the Hongshui River Basin region, the company's overall power generation increased year-on-year.

occurrences

Company releases 2024 semi-annual report

2024H1 achieved operating income of 4.83 billion yuan, up 16.25% year on year; net profit due to mother was 1.437 billion yuan, up 57.40% year on year; net profit after deducting non-return to mother was 1.442 billion yuan, up 58.42% year on year. Achieved a weighted return on net assets of 8.45%, an increase of 3.33 percentage points over the previous year; achieved basic earnings per share of 0.18 yuan/share, an increase of 63.64% over the previous year.

Brief review

The year-on-year increase in hydropower generation led to revenue growth. Thermal power output reduced pressure drop operating costs. In the first half of 2024, the company achieved operating income of 4.83 billion yuan, an increase of 16.25% over the previous year; net profit to mother was 1.437 billion yuan, an increase of 57.40% over the previous year. The year-on-year increase in the company's revenue in the first half of the year was mainly due to the Hongshui River basin where the company's backbone power plant is located. Incoming water increased a lot year-on-year, and power generation increased year-on-year. At the same time, the decline in coal prices combined with the decline in the company's thermal power generation capacity helped improve the company's operating costs. In the first half of 2024, the company achieved operating costs of 2.466 billion yuan, a year-on-year decrease of 5.25%. Looking at a single quarter, the company achieved net profit of 1.007 billion yuan in 2024Q2, an increase of 62.81% over the previous year. In terms of period expenses, the 2024H1 company's management expenses rate and financial expense ratio were 2.79% and 5.74%, respectively, with year-on-year changes of -0.40 and -1.17 percentage points. Thanks to a drop in the pressure on the company's financial expenses, the company's financial expenses declined year-on-year. In the first half of 2024, the company's comprehensive financing cost rate fell to 2.6%, and the company's financial expenses were 0.277 billion yuan, a year-on-year decrease of 3.46%. The company announced the 2024 mid-term profit distribution plan. It plans to pay a cash dividend of 0.85 yuan (tax included) for every 10 shares, with a total dividend of 0.67 billion yuan, accounting for 46.61% of the net profit returned to mother in the semi-annual consolidated statement.

Improvements in incoming water led to an increase in the scale of power generation. Hydropower squeezed thermal power output declined year on year. As of the end of June 2024, the company's installed capacity reached 13.2973 million kilowatts. Among them, hydropower, thermal power, wind power, and photovoltaic installations were 10.2354 million kilowatts, 1.33 million kilowatts, 0.8481 million kilowatts, and 0.8838 million kilowatts, respectively. The company continues to promote new energy investment and construction. Recently, it has released several investment plans for new energy power generation projects, including the Pingle Wind Power Project, the Daping Photovoltaic Project, and the Bawei Photovoltaic Project. In the first half of 2024, the company achieved a cumulative total of 17.579 billion kilowatt-hours of power generation, an increase of 19.48% over the previous year. Among them: hydropower 14.397 billion kilowatt-hours, up 27.05% year on year; thermal power 1.627 billion kilowatt-hours, down 25.09% year on year; wind power 1.159 billion kilowatt-hours, up 14.87% year on year; and PV 0.396 billion kilowatt-hours, up 97.75% year on year. Thanks to the year-on-year improvement in incoming water from the Hongshui River Basin region, the company's overall power generation increased year-on-year. Overall, we believe that the company's hydropower assets are high quality, and the installed scale of wind and photovoltaic power generation is expected to continue to grow. The net profit from 2024 to 2026 is estimated to be 27.6 billion yuan, 29.14 billion yuan, and 3.126 billion yuan, respectively, maintaining the “buy” rating.

Risk analysis

Power policy risks: Currently, all thermal power from Guangxi has entered the market, photovoltaics and wind power parts have entered the market, and hydropower from Sichuan and Yunnan have also basically been marketed. Spot trading in the five southern provinces is being actively promoted, and policy fluctuations will cause the company's profit level to fluctuate somewhat.

Climate risk: The company accounts for a relatively high hydropower installation and is in the main position of power generation. Incoming water from various hydropower basins is greatly affected by climate change, and wind power and photovoltaics are also greatly affected by the local climate. The company's active new energy and hydroelectric power units are distributed in different watersheds in Guangxi, Sichuan, Guizhou, Hubei, Yunnan, etc., with large geographical differences. Climate change and unstable incoming water, wind, and light will have an impact on the company's power generation.

Risk of coal price fluctuations: The company's thermal power plant, Heshan Power Plant, has an installed capacity of 1.33 million kilowatts. Fluctuations in coal prices will affect the efficiency of the company's thermal power business.