Core views:
Water, fire and landscape resonance contributed to the increase in performance, and the dividend exceeded expectations by 55%. In 2023, the company achieved operating income of 56.712 billion yuan (+12.3% year-on-year) and net profit of 6.705 billion yuan (YoY +64.31%). The sharp increase in performance was mainly due to increased thermal power, cost reduction, and profit improvement. The increase in hydropower prices made up for the decline in electricity capacity, an increase in installed scenery, a 14.6% year-on-year decrease in financial expenses, and a 155% year-on-year increase in investment income. In 24Q1, hydropower was steady, and profits from thermal power and wind power increased, and net profit to mother increased 26.1% year-on-year. In 2023, the company plans to pay a dividend of 3,688 billion yuan. The dividend rate of 55% exceeds expectations and is higher than 50% of the promised distributable profit.
The price of hydropower has been reduced and increased, the amount of thermal power has increased, and the amount of green electricity has increased. Hydropower: Since 2023, hydropower generation has declined 5% year on year, but the increase in electricity prices sent from Jinguan to the Soviet Union and the increase in the share of electricity in high electricity prices led to a 10.3% year-on-year increase in hydropower prices, and the profit of the Yalong River is steady; thermal power: Qinzhou No. 2 electricity was put into operation, and incoming water in the region was dry. Electricity generation increased 14.9% year on year in '23, electricity prices fell slightly by 1.9%, while coal prices fell sharply; Green Power: In 2023, Green Power's installed capacity increased by 2.43 GW, and power generation increased by 40.7% year on year. 2024Q1 The amount of thermal power and wind power increased year-on-year, the price of hydropower and electricity rose again, and profits in various sectors continued to rise.
The return of incoming water to a high level of energy storage contributed to an increase in the commissioning of the Huofeng photovoltaic station. At the end of March 2024, energy storage in the Yalong River was higher year-on-year. Combined with incoming water improving last year's Q2 electricity consumption base, the inflection point of hydropower has reached. At the same time, the company is constructing 0.51 GW in Batang, Indonesia, and 3.72 GW is under construction and approval; at the end of 2023, the water landscape is also a performance growth point for the Yalong River; both Qinzhou Phase III units have already been put into operation (2 x 660,000 kilowatts), with an annual design power generation capacity of 6.6 billion kilowatt-hours. In 2023, the electricity generation capacity was reduced to 6.6 billion kilowatt-hours Profits are outstanding, and Huaxia Electric Power's 0.6GW unit is under construction.
Profit forecasting and investment advice. The company's net profit from 2024 to 2026 is estimated to be 77.2/83.6/9.35 billion yuan, respectively, and the PE corresponding to the latest closing price is 15.5/14.3/12.8 times, respectively.
Hydropower prices have increased, thermal power profits have been restored, and new energy sources are growing at an accelerated pace. Referring to peer valuation, the company was given 17 times PE in 24 years, corresponding to a reasonable value of 17.61 yuan/share, maintaining a “buy” rating.
Risk warning. Fluctuations in incoming water; risk of feed-in tariff adjustments; rising coal prices, etc.