Incident: The company released its 2024 quarterly report. The company achieved operating income of 30.952 billion yuan and net profit attributable to the parent company of 1,862 billion yuan, an increase of 64.21% over the previous year
Benefiting from the decline in cost-side thermal coal prices, 2024Q1's net profit to mother increased significantly by 64.21%: 2024Q1 benefited from a sharp year-on-year decline in cost-side coal prices, and the company achieved net profit of 1,862 billion yuan in 2024Q1, an increase of 64.21% over the previous year. As of March 31, 2024, the liquidation price of 5,500 thermal coal at Qinhuangdao Port reached 827 yuan/ton, or -23.07% year-on-year, a sharp drop on the cost side.
2024Q1 company feed-in power -0.3%, feed-in tariff -4.1%: 2024Q1 completed feed-in power of 52,477 billion kilowatt-hours, -0.3% year-on-year; achieved an average feed-in tariff of 509.31 yuan/megawatt-hour, -4.1% YoY
In 2024, we recommend the thermal power sector because the electricity consumption of the whole society is exceeding expectations, driven by AI and electric vehicles. Looking at the global level of AI computing power and the increasing demand for electricity driven by electric vehicles, we expect that in 2024, computing power will contribute 1-2% of society's electricity consumption, and electric vehicles will contribute 1% of society's electricity consumption. 2024Q1 The entire society achieved electricity consumption of 2337.3 billion kilowatt-hours, an increase of 9.8% over the previous year, and achieved rapid year-on-year growth in power generation. Driven by the electricity consumption of the whole society, we expect that thermal power will drive the sector's performance to exceed expectations due to its peak output capacity.
Focus on the improvement in the expected dividend rate in the thermal power sector in 2024. The thermal power industry is not a high-dividend industry in the traditional sense due to the strong volatility of its performance, but we are concerned that benefiting from the declining trend in capital expenditure in the coal power industry, compounded by the 2024-2025 downward channel in thermal coal prices, we expect the price center to drop 100-200 yuan/ton to 800-900 yuan/ton in 2024, and the thermal power sector is expected to see an increase in the dividend rate of industry companies. The National Development and Reform Commission has determined a three-step plan for coal power: “capacity increase and control” during the 14th Five-Year Plan period, “capacity control and reduction” after the 15th five. We judge that with the advent of the era of capacity control and reduction in the coal power industry, the downward trend in capital expenditure in the coal power industry has basically been determined, and the industry dividend ratio is expected to increase significantly. The company achieved a cash dividend ratio of 43.65% in 2023, and continues to monitor the expected continuous improvement in both thermal power sector performance and dividends in 2024/2025.
Profit forecast and investment rating: Considering the impact of declining coal prices, we maintain our estimated net profit of 6.440 billion yuan, 7.317 billion yuan, and 8.253 billion yuan in 2024-2026, with year-on-year increases of 42.40%, 13.62%, and 12.79%, corresponding to PE of 11, 9, and 8 times, maintaining the “buy” rating.
Risk warning: risk of electricity demand falling beyond expectations, risk of impairment, etc.