In 2023, the company's net profit to mother increased sharply year-on-year. The dividend ratio was 43.65%. In 2023, the company achieved revenue/net profit of RMB 1171.8/4.52 billion yuan, +9.45%/+3789% compared to the same period as the annual report disclosure (adjusted to the 2022 base figure), and net profit to mother was close to the median value of 41.5-4.98 billion yuan in the performance forecast. In 2023, the company's DPS was 0.15 yuan (tax included), with a total dividend of 1.53 billion yuan, accounting for 43.65% of the net profit that can be distributed to mother (after deducting interest on perpetual bonds of 1.01 billion yuan). Considering reasons such as the decline in the coal price center, the company's future investment income was lowered, and the company's net profit forecast for 2024-2026 was adjusted to 62/75/91 billion yuan (previous value: 71/83/100 million yuan) and H shares to 61/74/90 billion yuan (previous value:
$70/81 billion). Based on the company's A shares and H shares in the new energy/coal/hydropower sector 15/1.25/2x and 10/0.80/2x 24E PE/PB/PB, the target price for A/H shares is 7.73 yuan/5.00 HK$5.00 (previous value: 6.69 yuan/HK$3.77), and “buy”.
In 2023, power generation capacity was +1.3% YoY, feed-in price -0.4% YoY. In 2023, the company completed power generation/feed-in capacity of 2238/209.5 billion kilowatt-hours, +1.3%/+1.2% YoY. Among them, the feed-in power capacity of thermal power/hydropower was +1.5%/-4.0% YoY to 2003/92 billion kilowatt-hours. The year-on-year increase in thermal power generation in 2023 was mainly due to the increase in electricity consumption in the whole society and the company's newly put into production of 3695.54 MW of thermal power installed capacity, of which 3190/505.54 MW of coal/gas were respectively. According to the company's annual report, as of the end of the reporting period, the company had obtained approval and construction of 4/2/1 gas/coal electricity/savings projects, with an installed capacity of 3578.84/2660/298 MW, respectively. In 2023, the company's average feed-in price was -0.4% YoY to 516.78 yuan/MWh.
Profit growth in 2023 was mainly due to thermal power's profit recovery. Investment revenue contribution declined in 2023. The company's investment income in joint ventures was 3.759 billion yuan, a year-on-year decrease of 1,038 billion yuan. The investment income contribution of the company's participation in the new energy platform in 2023 was 2.95 billion yuan, an increase of 360 million yuan; considering the decline in coal prices in the 2023 market, we believe that the year-on-year decline in the company's investment income in joint ventures was mainly due to the year-on-year decrease in the profit contribution of participating coal companies. For example, Huadian Coal contributed 580 million yuan to the company's investment income in 2023, a year-on-year decrease of 180 million yuan.
A/H shares all maintain a “buy” rating
Based on the company's investment income of 3.781 billion yuan in new energy investment in 2024 and net assets of 305.82/7.384 billion yuan, A shares and H shares refer to newenergy/thermal power/hydropower comparable company Wind agreed to expect 24E PE/PB/PB 15.4/1.28/2.3x and 9.5/0.82/2.3x, giving the company A shares and H shares the new energy/thermal power/hydropower sector 15/1.25/2x and 10/0.80/2x 24E PE/PB/PB, discount/premium Considering that although the company's new energy is an equity asset, it is the only new energy developer of the Huadian Group; thermal power includes new energy in comparable company valuations; there is a gap in the quality of hydropower assets compared to the leader. After excluding the equity of perpetual bond owners of $30.656 billion, the target market value for A/H is $791 billion/ HK$51.1 billion.
Risk warning: Changxie Coal's implementation of the contract fell short of expectations, the rise in coal and electricity prices fell short of expectations, the share ratio of participation in new energy platforms was diluted, and the development of participation in new energy platforms fell short of expectations.