Event: The company released its 2024 quarterly report. In the first quarter of 2024, the company achieved revenue of 45.555 billion yuan, a year-on-year decrease of -0.13%; realized net profit to mother of 1,785 billion yuan, an increase of 88.62% over the previous year.
Comment:
Volume increased and prices fell, and revenue for the first quarter was basically the same year on year
In terms of electricity capacity, the company completed 106.244 billion kilowatt-hours of electricity generation and 10.690 billion kilowatt-hours of feed-in electricity in the first quarter, up 4.98% and 5.02%, respectively. In terms of power sources, thermal power completed feed-in capacity of 86.023 billion kilowatt-hours in the first quarter, an increase of 4.24%; hydropower completed 7.728 billion kilowatt-hours of feed-in electricity, a year-on-year decrease of 3.22%, or weak incoming water; benefiting from the increase in installed capacity, wind and light increased 12% and 136% year-on-year respectively. In terms of electricity prices, the company's average feed-in tariff in the first quarter was 455.58 yuan/kilowatt-hour, a slight decrease of 1.6% over the previous year. Taken together, the company achieved revenue of 45.555 billion yuan, a year-on-year decrease of -0.13%.
The increase in investment income was compounded by the fact that Prudential Shendong was not included in the consolidated statement. On the one hand, there was a significant year-on-year decline in coal prices. If one month's coal inventory is taken into account, the average final coal liquidation price (Q5500) of Qinhuangdao Port was 924 yuan/ton, a year-on-year decrease of 273 yuan/ton, we expect the company's fuel costs to decline; on the other hand, depreciation and operating costs will also increase as new energy installations are put into operation. The company's operating costs in the first quarter increased slightly to 39.5 billion yuan year on year; gross margin was 13.34%, which was basically the same year on year. Furthermore, the company achieved investment income of 775 million yuan in the first quarter, a year-on-year correction. Taken together, the company's net interest rate for the first quarter increased 2.4 pct to 7.6% year on year; net profit to mother was 1,785 billion yuan, an increase of 88.62% year on year.
It is expected that Huoshui Green Installed Equipment will continue to expand, and may drive performance to continue improving in 2023. Shanghai Temple Company put into operation 1 million kilowatt thermal power units, commenced construction of 6.64 million kilowatts of thermal power projects, approved 2.807 million kilowatts of hydropower projects, and construction of about 3.52 million kilowatt hydroelectric power units in the Dadu River Basin. In terms of new energy, in 2023, the company obtained 16.74 million kilowatts of new energy construction targets, 15.288 million kilowatts of nuclear preparation, and an additional 72457 million kilowatts of installed capacity; in 2024, the company plans to obtain more than 14 million kilowatts of new energy resources, approve 12 million kilowatts, start construction of 8.3 million kilowatts, and start production of 8.6 million kilowatts.
Investment advice:
Considering the increase in electricity volume in the first quarter, a slight drop in electricity prices, investment income, etc., the profit forecast was raised. The company's net profit for 2024-2026 is estimated to be 85, 99, and 11.7 billion yuan (previous value was 79, 95, 113 billion yuan), corresponding to PE 11, 10, and 8 times, maintaining a “buy” rating.
Risk warning: New installed capacity falls short of expectations, the pace of payment of subsidies has drastically slowed, industry competition is too fierce, technological progress in the industry is slowing down, coal prices are rising sharply, the risk of electricity prices falling short of expectations, downstream demand falls short of expectations, transfer of shares in China Power Construction Investment still needs to be submitted to the shareholders' meeting for consideration, etc.