水电：2024 来水转丰，1H24 以量补价雅砻江水电营收同比+3.2%。Brief performance review
On the evening of January 28th, the company released its 24-year semi-annual report. 1H24 achieved revenue of 27.1 billion yuan, +2.8% year over year; net profit without deduction of 3.72 billion yuan, or +12.0% year over year. In 2023, revenue was 12.99 billion yuan, or -0.9% YoY; net profit after deduction was 1.69 billion yuan, or -1.2% YoY.
Management analysis
Hydropower: In 2024, the revenue of Yalong River hydropower was +3.2% compared to the same period with volume compensation in 1H24.
1) Volume: Under the influence of incoming water transfer*+ low base for the same period last year, 1H24 completed feed-in power of 43.1 billion degrees, +10.1%; of these, Yalong River Hydropower, which accounts for the largest share of electricity, completed feed-in electricity usage of 37.95 billion kilowatts, +9.4% YoY, 2) Price: Renewable energy uptake mitigates the conflict between electricity supply and demand. 1H24 average feed-in price was 0.305 yuan/kWh, -2.2% YoY. The biggest drop in electricity prices in the Three Gorges was mainly due to a drop in the average spot price of electricity in Gansu; in '24, the price of electricity delivered to the land by Jin Guan was basically the same as the same year on year, while the 1H24 Yalong River hydropower prices were -1.9% year-on-year, mainly due to the increase in power generation brought about by water improvements since June, enjoying low electricity prices during the flood season. Taken together, 1H24 Yalong River Hydropower achieved revenue of 11.02 billion with volume compensation, +3.2% year-on-year.
Thermal power: The increase in installed capacity made up for the impact of declining utilization hours, and industry performance continued to improve under coal prices.
1) Amount: 1H24 feed-in electricity was 26.4 billion degrees, +2.6% year-on-year. Among them, Qinzhou Electric Power's two units were put into operation at 12M23 and 4M24 respectively. 1H24 completed 1.27 billion kilowatts of feed-in electricity, with an incremental contribution rate of 192.1%. 2) Price: Under the support of the capacity mechanism, the decline in the number of hours brought about a month-on-month increase in average feed-in tariffs: 2024 feed-in tariffs were 0.467 yuan/kWh, compared to -5 %/kWh and +4 percent month-on-month (kWh.3) Profit: 1H24, the price of coal in the Qingang 5500 kcal market was -147.6 yuan/ton year on year, and the decrease in fuel costs brought about an improvement in profit. Taking the Qinzhou Company, where both volume and price have dropped, it is estimated that the net profit of 1H24 kilowatt hour electricity was about 0.07 yuan/kWh, an increase of about 0.01 yuan/kWh over the previous year.
The increase in the price of new energy and the reduction in revenue have continued to grow. The company is focusing on building an integrated water and landscape base for the Yalong River, adding about 0.39 million kilowatts of new energy installed in 1H24. Driven by installed capacity, 1H24's electricity feed-in capacity was 5.8 billion kilowatt-hours, +32.0% year over year. Affordable Internet projects increased and market-based electricity prices fluctuated, causing 1H24 wind and optical feed-in tariffs to -3.9% and -30.9%, respectively.
If the VAT rate does not change, the 1H24 new energy sector revenue will be +17.2% year-on-year.
The decline in interest rates further reduced financing costs, and financial expenses were -9.1% year-on-year. The size of 1H24's interest-bearing debt was +5.0% year over year, while interest expenses were -4.4% year over year, mainly due to lower capital costs.
Profit Forecasts, Valuations, and Ratings
In 2024, the company's performance is expected to continue to grow due to improved incoming water, declining coal prices, and installed wind and energy.
The company is expected to achieve net profit of 7.71/8.36/9.14 billion yuan in 24-26, EPS of 1.03/1.12/1.23 yuan respectively, and the current PE valuation of the company's stock price is 16 times, 14 times, and 13 times, respectively, maintaining a “buy” rating.
Risk warning
Incoming water conditions, falling coal prices, demand for electricity, risk of new energy installations falling short of expectations; risk of electricity price fluctuations, etc.