Introduction to this report:
The profitability of the company's wind power projects has exceeded expectations, driving a high increase in performance, and the installed capacity growth is expected to continue to be realized.
Key points of investment:
Maintain the “increase in holdings” rating: maintain the 2023-2025 EPS of 0.60/0.99/1.12 yuan, maintain the target price of 16.52 yuan, and maintain the “increase in holdings” rating.
The 2Q23 results were in line with expectations. The company's 1H23 revenue was 1.29 billion yuan, +5.2% year on year; net profit of KIMU was 300 million yuan, +69.1% year on year, in line with the performance forecast range. In 2Q23, the company's revenue was 640 million yuan, +6.0% year on year; net profit was 120 million yuan, +152% year on year.
The profitability of wind power projects exceeded expectations, driving high performance growth. The company's 1H23 performance growth was mainly driven by the wind power business. The net profit of 1H23's wind power division was 240 million yuan, +107% year-on-year.
The volume and price of the company's wind power business rose sharply. The 1H23 wind power division's revenue was 390 million yuan, +55.9% year on year; the net interest rate of the wind power division was 61.1%, +15.0 ppts year on year. We speculate that the increase in the profit margin of the company's wind power business is mainly due to: 1) the actual profitability of newly put into production wind power projects exceeding market expectations; 2) the increase in wind resources in Yunnan Province improved year on year, and 1H23's wind power utilization hours were 1,731 hours, +190 hours year on year. The company's 1H23 generated 1.09 billion kilowatt-hours, +191% year-on-year.
Capital expenditure is accelerating, and installed capacity is expected to continue to grow at a high rate. As of August 22, 2023, the company has put into production 877,000 kilowatts of wind power, +68.7% compared to the end of 2022. 1H23 The company paid 1.01 billion yuan in cash for the purchase and construction of fixed assets, intangible assets and other long-term assets, +120% over the same period last year.
All work on wind power projects such as the remaining units of the company's Yongning project, Jinzhong Phase I, and Jianshuitang Liangzi is still progressing in an orderly manner. We believe that the certainty that the company will achieve the annual new energy installation target (total installed capacity exceeded 2 million kilowatts by the end of 2023) has strengthened.
Risk warning: Electricity demand falls short of expectations, salt and nitrate business operations fall short of expectations, etc.