Introduction to this report:
4Q23 The pace of installation of new energy grids has accelerated, and the performance growth rate has been corrected; subsequent installations are expected to maintain high growth under the support of sufficient reserve resources.
Key points of investment:
Maintain an “increase in holdings” rating: Taking into account factors such as the company's rapid disclosure of performance reports, electricity prices and consumption for subsequent new energy projects, etc., the 2023-2025 EPS was lowered to 0.26/0.32 yuan/0.36 yuan (original value 0.32/0.39/0.46 yuan). Referring to comparable companies in the new energy power generation industry, PE was given 16 times in 2024, the target price was lowered to 5.12 yuan, and the “gain” rating was maintained.
The company's 2023 performance fell short of expectations: the company announced revenue of 26.5 billion yuan for 2023, +11.1% year-on-year; net profit to mother was 7.35 billion yuan, +2.7% year-on-year, and the full year results were lower than our previous expectations. 4Q23 revenue was 7.16 billion yuan, +11.8% YoY; net profit to mother was 1.91 billion yuan, +93.8% YoY.
The growth in power generation has accelerated, and the growth rate of performance in a single quarter has been corrected. Due to the company's slow electricity growth rate and rising costs in the first three quarters of 2023, the performance for the same period fell short of expectations. We estimate that the change in the company's 4Q23 performance growth rate will mainly benefit from: 1) The company's total installed capacity exceeded 40 GW by the end of 2023, +50.8% year-on-year, and the rapid increase in installed capacity led to electricity growth (the company's 4Q23 power generation capacity was 151 billion kilowatt-hours, +16.2% year-on-year, the growth rate was +5.9 ppts compared to 3Q23); 2) The base effect for the same period last year: the company's 4Q22 assets depreciated by 490 million yuan.
Reserve resources are abundant, and installed capacity is expected to maintain a high growth rate. In 2023, the company added more than 13.5 GW of installed capacity, of which more than 10.5 GW was added in 4Q23, and the installed scale of new energy exceeded previous expectations (the company previously expected to add no less than 5 GW of new energy grid-connected installed capacity in 2023). As of October 2023, the company's resource reserves exceeded 150 GW, and as of the end of 3Q23, 17.0 GW of installed capacity were under construction. We believe that the company's installed capacity is expected to maintain rapid growth with the support of sufficient project reserve resources.
Risk warning: Installed capacity falls short of expectations, electricity prices fall short of expectations, subsidies fall short of expectations, etc.