Thermal power reversed losses and green electricity increased steadily. 23 performance increased 56.2% year on year. The company announced its 2023 results. In 2023, the company achieved net profit of HK$11.03 billion (+56.2% YoY), including core profit of thermal power of HK$3,611 billion (HK$2,582 billion in the previous year), core profit of renewable energy of HK$9.726 billion (+12.5% YoY), impairment losses of HK$2.75 billion (HK$1.05 billion in the previous year), and a ROE of 13% in 23. The final dividend of the company was HK$0.587 per share, with a total dividend of HK$1.415 three times throughout the year, with a dividend rate of 62%, corresponding to the latest closing price with a dividend rate of 7.9%.
The fall in coal prices led to a reversal in thermal power, with significant month-on-month improvements in the second half of the year. According to the company's financial report, as of the end of 2023, the thermal power equity installed capacity was 37.17 GW, and the company sold 149.5 billion kilowatt-hours of electricity in 2023 (+2.3% year-on-year), and the number of hours used was 4,688 hours, which is higher than the national average of 222 hours. In 2023, the unit price of the company's standard coal was 987.5 yuan/ton (down 12.6% year on year). Among them, the unit price of 23H1 standard coal was 1,045 yuan/ton, and the core profit of 23H1/H2 thermal power was HK$726/2,885 million, respectively. The month-on-month improvement was significant. It is expected that coal prices will continue to fall, improving ROE levels.
Green Power Construction is expected to speed up, and a new wind power installation target of 10 GW will be added in 2024. In 2023, the company added 5.34 GW of grid-connected installations, and the 14th Five-Year Plan added 40 GW of renewable energy installations (11.4 GW completed) in the 14th Five-Year Plan. Currently under construction, the installed scenery rights are 7.30/6.06 GW, respectively, and the new scenery construction index 19.5 GW was added in 2023. The electricity sales volume of Scenery was +12.4%/+111.8%, respectively. The number of hours of wind utilization was 2451/1480 hours, higher than the national average of 226/194 hours, respectively.
Profit forecasting and investment advice. Excluding the spin-off of subsidiaries, the company's net profit from 2024 to 2026 is estimated to be HK$146/163/18.5 billion, respectively, and the PE corresponding to the latest closing price is 5.9/5.3/4.7 times, respectively. Thermal power has reversed losses, and there is plenty of room for new energy. Referring to peer valuation, give the company a 24-year 9x PE valuation, corresponding to a reasonable value of HK$27.28 per share, and maintain a “buy” rating? Risk warning. Rising coal prices; project construction falling short of expectations; capital risk; risk of asset impairment.