Description of the event
The company released its 2023 annual report: in 2023, the company achieved operating income of 117.176 billion yuan, an increase of 9.45% over the previous year; realized net profit of 4.522 billion yuan, an increase of 3789% over the previous year.
Incident comments
The revenue performance of the main electricity industry was stable, and the coal trade led to a steady increase in revenue. In 2023, due to improvements in the supply and demand environment in the company's region and rapid growth of new energy sources squeezing thermal power output, the company's coal and electricity usage hours were 4,301 hours, a decrease of 207 hours over the previous year, and the gas and electricity usage hours were 2,188 hours, a decrease of 32 hours over the previous year. However, thanks to the expansion of units, the company put into operation 3.2 million kilowatt coal power units and 675,500 kilowatt gas power units throughout the year, and the company's holding installed capacity reached 584.498 million kilowatts, an increase of 6.75% over the previous year. Therefore, driven by the expansion of units, the company completed power generation capacity of 223.795 billion kilowatt-hours, an increase of about 1.30% over the same period last year. Among them, thermal power generation capacity was 214.459 billion kilowatt-hours, up 1.55% year on year; hydropower generation capacity was 9.336 billion kilowatt-hours, a decrease of 4.20% year on year. In terms of electricity prices, the company's average feed-in tariff for the full year of 2023 was 516.78 yuan/megawatt-hour, a year-on-year decrease of 0.43%. Driven by the increase in electricity capacity, the company's power generation business achieved revenue of 96.152 billion yuan, an increase of 0.69% over the previous year. In addition, thanks to the rapid expansion of the coal sales business, the company achieved operating income of 117.176 billion yuan for the full year of 2023, an increase of 9.45% over the previous year.
Continued cost recovery, return on investment and impairment limited performance growth. In 2023, thanks to the steady decline in coal prices, the company's fuel cost pressure was also significantly released. The company's fuel cost in 2023 was 75.462 billion yuan, a year-on-year decrease of about 8.93%, and achieved a significant decline in the context of a year-on-year increase in thermal power. Thanks to this, the company's electric heating business achieved gross profit of 6.584 billion yuan, a significant recovery from the 2022 gross profit loss of 393 million yuan. The coal trading business also achieved gross profit of 480 million yuan, an increase of 683.88% year on year. In terms of other costs, thanks to the fall in macro interest rates and steady progress in debt service payments, the company's financial expenses in 2023 were 3.64 billion yuan, a decrease of 10.95% over the previous year. In addition, the company's credit impairment in 2023 was -221 million yuan, mainly due to the recovery of accounts receivable from previous years that had already been prepared for bad debts, making an additional contribution to the company's performance. However, the company also has some profit reduction factors: in 2023, the company accrued asset impairment losses of 527 million yuan, which limited performance to a certain extent. In addition, the company's investment income in 2023 was 3.759 billion yuan, a year-on-year decrease of 21.64%. Among them, Huadian New Energy contributed 2.95 billion yuan in investment income, up 13.72% year on year, while participating coal companies contributed only 472 million yuan in investment income, a sharp decrease of 75.74% year on year, which is the main reason for the decline in the company's investment income performance. Overall, however, driven by the continuous release of operating pressure from the main power business, the company achieved net profit of 4.522 billion yuan in 2023, an increase of 3789% over the previous year. According to the company's annual report, the company's dividend per share in 2023 was 0.15 yuan (tax included), and the total distribution accounted for 43.65% of the net profit available for distribution to mother, maintaining steady performance.
Projects under construction are progressing steadily, and the asset structure is being optimized at an accelerated pace. By the end of 2023, the company still had 6.536,800 kilowatts of projects under construction, including 6.238 million kilowatts of thermal power projects. After the project is completed and put into operation, the company's installed capacity will increase by 11.18%, and abundant projects will guarantee the company's steady growth in the long term. Furthermore, the company's balance ratio at the end of 2023 was 62.62%, down 5.83 percentage points from the previous year, and the asset structure was optimized at an accelerated pace.
Investment advice and valuation: According to the company's latest financial data, we expect EPS to be 0.63 yuan, 0.71 yuan, and 0.80 yuan respectively in 2024-2026, and the corresponding PE will be 10.70 times, 9.51 times, and 8.47, respectively, maintaining a “buy” rating.
Risk warning
1. There is a risk that electricity supply and demand will deteriorate;
2. There is an unseasonal risk in coal prices.