Description of the event

The company disclosed its 2024 semi-annual report: In the first half of 2024, the company achieved operating income of 18.883 billion yuan, a year-on-year decrease of 4.94%, and realized profit to mother of 3.827 billion yuan, a year-on-year decrease of 22.86%.

Incident comments

The volume and price of wind power were under pressure, and revenue declined somewhat in the first half of the year. In the first half of 2024, the company added 2.2867 million kilowatts of installed capacity, including 0.595 million kilowatts of wind power and 1.6917 million kilowatts of photovoltaics. Thanks to the expansion of installed capacity, as of the end of the first half of 2024, the company's holding installed capacity reached 37.88 million kilowatts, an increase of 19.79% year on year; of these, wind power installed capacity was 28.349 million kilowatts, up 7.72% year on year, and 7.656 million kilowatts of photovoltaics, up 123.13% year on year. Despite a steady increase in installed capacity, due to weak incoming wind in the first half of the year, the company's wind power generation capacity was 31.585 billion kilowatt-hours, down 4.60% year on year, and wind power utilization hours fell 7.95% year on year to 1,170 hours in half a year. Photovoltaics, on the other hand, was driven by a high increase in installed capacity, generating 3.589 billion kilowatt-hours, an increase of 122.87% over the previous year. Thermal power was squeezed by large hydropower generation, and the amount of electricity generated decreased by 2.39% year on year. Overall, the company's power generation capacity in the first half of the year was 40.082 billion kilowatt-hours, with a year-on-year growth rate of only 0.84% under weak wind power restrictions. In terms of electricity prices, the first half of the year was affected by an increase in the share of market-based and affordable projects. The company's electricity sales price for all power supplies was 423 yuan/megawatt-hour (excluding tax, same below), down 7.44% year on year; of these, wind power sales price was 441 yuan/MWH, down 5.97% year on year; PV electricity sales price was 283 yuan/megawatt-hour, down 9.87% year on year. The company achieved revenue of 18.883 billion yuan in the first half of the year, a decrease of 4.94% over the previous year due to certain pressure in volume and price, compounded by the contraction of coal sales business.

The pressure on performance is limited to the short term, with emphasis on marginal changes in the base effect in the third quarter. Due to the increase in operating costs brought about by new installed equipment, the company's gross margin for the first half of the year was 36.20%, down 5.21 percentage points from the previous year. The gross profit for the first half of the year was 6.836 billion yuan, down 16.90% year on year. However, thanks to improvements in the operating income of participating companies, the company achieved an investment of 0.16 billion yuan in the first half of the year, a significant improvement over the loss of 0.058 billion yuan in the same period last year. Overall, due to weak trends, the company's net profit to mother in the first half of the year was 3.827 billion yuan, a year-on-year decrease of 22.86%. Among them, the pressure on the company's operating performance increased due to a 6.39% drop in total power generation capacity in the second quarter, compounded by pressure on electricity prices and cost expansion. As a result, the company's revenue fell 9.93% year on year in the second quarter, and net profit to mother fell 45.38% year on year. However, we believe that short-term performance pressure cannot be extrapolated linearly. The core of the high electricity pressure in the second quarter of this year was weak incoming wind and the record number of hours used by wind power last year. The number of hours used by wind power in the third quarter of last year has declined, and the impact of the high base has weakened marginally. Therefore, we are still optimistic about the upward growth in the company's performance due to marginal restoration of incoming wind and scale expansion.

Acting proactively, demonstrating leading responsibility. In November 2023, the company announced the H share repurchase plan; in February 2024, the company also issued the “Notice on the “Double Improvement of Quality and Return” action plan. The company announcement once again mentioned that it attaches great importance to investor relationship management, establishes a multi-level healthy interaction mechanism, conveys the company's value information with high quality, and implements a “long-term, stable and sustainable” shareholder value return mechanism. At the beginning of the year, the State Assets Administration Commission stated that it would further study and include market value management in the performance assessment of central enterprise leaders. The action plan announced by the company was also a timely response to the relevant requirements of the State Assets Administration Commission. Against the backdrop of overall pressure on the industry, the company acted proactively, reflecting its responsibility as a leading company in the new energy power generation operation industry.

Investment advice and valuation: According to the latest financial data, we expect EPS in 2024-2026 to be 0.93, 1.05, and 1.17 yuan, respectively, and the corresponding PE will be 17.43 times, 15.37 times, and 13.78 times, respectively, maintaining the company's “buy” rating.

Risk warning

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

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