Core views
In 2022, the company achieved operating income of 52,661 billion yuan, an increase of 18.45% over the previous year; Guimu's net loss was 3,004 billion yuan, an increase of 2.59% over the same period last year. The company's performance losses increased due to rising fuel costs in 2022, but in 2023, the company's coal and electricity prices rose further, compounded by a decline in imported coal prices, and the company's thermal power performance is expected to pick up. Furthermore, the company uses platform advantages to promote strategic expansion within and between provinces, and continues to carry out energy transformation. It plans to add 14 GW of green electricity installations during the “14th Five-Year Plan” period, and the energy transformation continues to accelerate. We expect the company's net profit from 2023 to 2025 to be 2,425 billion yuan, 3.149 billion yuan, and 4,001 billion yuan respectively. The corresponding EPS is 0.46 yuan/share, 0.6 yuan/share, and 0.76 yuan/share, maintaining the “buy” rating.
occurrences
Guangdong Electric Power A released its 2022 annual report
Guangdong Electric Power A released its 2022 annual report. In 2022, the company achieved operating income of 52,661 billion yuan, an increase of 18.45% over the previous year; achieved net profit of -3,004 billion yuan, an increase of 2.59% over the same period last year; net profit after deducting non-return to the mother was 2,937 billion yuan, an increase of 9.35% over the same period last year; and a net loss of 0.5721 yuan per share, an increase of 0.0144 yuan/share over the same period last year.
Brief review
Coastal coal-fired costs are high, putting pressure on thermal power, and the profit contribution of new energy has increased rapidly. Guangdong Electric Power A is one of the largest listed electricity companies in Guangdong Province. In 2022, the company achieved operating revenue of 52,661 billion yuan, an increase of 18.45% over the previous year; achieved operating costs of 52,852 billion yuan, an increase of 12.87% over the same period last year; realized net profit of Guimo - 3,004 billion yuan, an increase of 2.59% over the same period last year; deducted net profit of Fuwu Mo - 2,937 billion yuan, an increase of 9.35% over the same period last year. The company's revenue growth in 2022 was mainly due to the rise in the average price of feed-in electricity prices under the market-based reform of electricity; the increase in cost was mainly affected by higher fuel prices; the increase in profit losses was mainly due to the increase in electricity prices, which is difficult to cover the cost side pressure of high fuel costs. In 2022, the company's sales rate, management rate, and finance rate were 0.13%, 2.26%, and 4.06% respectively. The year-on-year changes were -0.02ppt, -0.21ppt, and +0.97ppt. The large increase in financial rates was mainly due to the increase in the company's investment and working capital requirements and the expansion of the scale of debt financing.
Guangdong Electric Power's main business focuses on electricity production and sales in Guangdong Province, which is divided into six major sectors: coal, gas, wind power, biomass, hydropower and photovoltaics. The gross profit of the sector in 2022 was -2,753 billion yuan, -691 million yuan, 1,384 million yuan, 40 million yuan, 015 million yuan, and 09 billion yuan respectively. The losses in the company's thermal power business were mainly affected by the continued high level of coal prices. The annual fuel cost reached 43.252 billion yuan, an increase of 4,589 billion yuan over the previous year, an increase of 11.87%.
Thermal power accounts for a relatively high share, and profits are expected to face marginal restoration
By the end of 2022, the company's holding installed capacity was 29.7 million kilowatts, of which 20.55 million kilowatts of coal power were installed, accounting for 69.2%; gas and electricity were installed 6.39 million kilowatts, accounting for 21.52%. The total annual power generation capacity was 114.1 billion kilowatt-hours, of which thermal power generated 108.7 billion kilowatt-hours, an increase of 0.86% over the previous year. Among them, coal and gas generated 93.6 billion kilowatt-hours and 15 billion kilowatt-hours respectively, a year-on-year change of +3.54% and -11.28%.
In 2022, the company's coal-fired power generation sector achieved operating revenue of 40.6 billion yuan, an increase of 15.14% over the previous year, mainly due to the increase in the average feed-in price; gas power generation revenue was 8.11 billion yuan, an increase of 27.26% over the previous year. The average annual feed-in electricity price for thermal power plants including tax was 0.54 yuan/kilowatt-hour, up 0.08 yuan/kwh from the previous year; the number of hours used was 4110 hours, down 496 hours from the previous year. The operating cost of coal was 43,378 billion yuan, an increase of 9.93% over the previous year, mainly due to high coal prices. The annual fuel cost was 43.3 billion yuan, accounting for 81.84% of operating costs, an increase of 11.87% over the previous year. Considering that the annual Changxie electricity price in Guangdong Province rose further in 2023, market electricity demand remained strong, and the price of imported coal began to fall gradually at the beginning of the year, we believe that the company's thermal power business is expected to recover.
Based on the provincial layout of the country, expand the second growth curve for new energy
The company is actively implementing the new energy transformation strategy. During the “14th Five-Year Plan” period, the company initially plans to install about 14 million kilowatts of new energy, including 1.6 million kilowatts of onshore wind power, 2.8 million kilowatts of offshore wind power, and 9.6 million kilowatts of photovoltaics. In 2022, the company not only continued to develop offshore wind power resources in the province, but also used the advantages of inter-provincial policies to actively lay out wind power projects in the northwest region. The pioneering strategy helped the company achieve new energy transformation. By the end of 2022, the company's wind power and photovoltaic installations were 2,345,000 kilowatts and 176,000 kilowatts respectively, with year-on-year increases of 375,000 kilowatts and 176,000 kilowatts respectively. The company's annual wind power and photovoltaic power generation capacity were 4.299 billion kilowatt-hours and 0.03 billion kilowatt-hours respectively, an increase of 1,993 million kilowatt-hours and 0.03 billion kilowatt-hours over the previous year. The planned installed capacity of the company's wind power projects in 2023 is 1 million kilowatts, and the planned installed capacity of photovoltaic projects under construction is 2.32 million kilowatts.
Demand for electricity is strong in operating regions, giving them a “buy” rating
The company's main business is geographically concentrated in Guangdong Province, accounting for 98.25% of the province's revenue in 2022. In 2022, Guangdong Province's GDP and electricity consumption were 1291,1858 billion yuan and 787.034 billion kilowatt-hours respectively, up 1.9% and 0.05% respectively over the previous year. Electricity demand in Guangdong Province is in a leading position in the country. Electricity consumption ranked first in the country for 4 of the past 5 years, with a compound growth rate of 4.47% in 5 years. It is at the midstream level of the country. The company is rooted in Guangdong, and demand for electricity is strong.
The company has now proposed a “1+2+3+X” strategy to actively expand resources for new energy projects through various forms such as self-construction and acquisition. Currently, it has completed about 10 million kilowatts of preparation. It is expected to continue to increase capital expenditure and rapidly expand the scale of new energy installations in the next few years. We expect the company's net profit from 2023 to 2025 to be 2,425 billion yuan, 3.149 billion yuan, and 4,001 billion yuan respectively. The corresponding EPS is 0.46 yuan/share, 0.6 yuan/share, and 0.76 yuan/share. The first coverage was given and given a “buy” rating.