occurrences

The company released its 2023 annual report and 2024 quarterly report. In 2023, 2024Q1 achieved operating income of 959.75 billion yuan and 20.024 billion yuan, respectively, up 19.68% and 13.45% year on year; net profit to mother was 65.20 billion yuan and 1,815 billion yuan respectively, up 456.83% and 79.62% year on year, respectively.

There was a high increase in power generation in the first quarter, and the profit of holding thermal power recovered significantly

On the revenue side, driven by the increase in electricity consumption of the entire society in Zhejiang Province and the commissioning of new installations (2 units in Yueqing Power Plant Phase III), the company's power generation capacity grew significantly. In 2023, 2024Q1 completed power generation capacity of 1632.38 and 38.348 billion kilowatt-hours respectively, up 7.40% and 17.79%, respectively. On the cost side, against the backdrop of falling coal prices, the company's fuel costs were reduced and profits were significantly recovered. Among them, Zhenhai Power Plant, Beilun Power Plant, Yueqing Power Plant, Jiahua Power Plant, Zhoushan Power Plant, and Huaizhe Power Plant achieved net profit of 1.70, 3.86, 4.92, 3.33, 2.52, and 363 million yuan in 2023, respectively, all of which reversed losses or increased significantly year-on-year. Looking ahead, considering the rapid decline in coal prices in the market after March of this year, the company's performance flexibility is expected to be further released.

The income from equity participation has been increasing steadily, and the role of a ballast stone for performance is prominent

The company achieved net investment income of 46.09 billion yuan and 1,232 billion yuan respectively in 2023, with year-on-year increases of 39.91% and 22.47% respectively, accounting for 70.69% and 67.88% of overall performance respectively. 2024Q1 By type, the company's participation in nuclear power companies contributed about 1,698 billion yuan in revenue in 2023, an increase of about 25.06% over the previous year, while other companies such as thermal power contributed about 2,912 billion yuan in revenue, an increase of about 50.32% over the previous year. The overall income from equity participation increased steadily.

Construction of the new project is progressing steadily, and with high dividends expected to be implemented in terms of assets, the company's Jiaxing Power Plant Phase IV and Tai2 Power Plant Phase II projects were approved, and Yueqing Power Plant Phase III achieved “double commissioning” before peak summer in 2023. Project nodes such as Liuheng Power Plant Phase II, Zhenhai Turbine, and Zhenhai Joint Relocation are progressing faster than planned, and the expansion of asset scale is expected to bring room for continuous growth to the company's performance.

In terms of dividends, the company plans to distribute a cash dividend of 2.5 yuan (tax included) for every 10 shares in 2023. It is estimated that a total cash dividend of 3.352 billion yuan (tax included) will be distributed. The dividend ratio is 51.42%. With improved performance, the company's high dividend expectations have been successfully implemented.

Profit forecast and valuation: Considering the significant increase in the company's expenses in the fourth quarter of previous years, we adjusted the full-year profit forecast. The company's net profit for 2024-2026 is 82.72, 92.15, and 9.650 billion yuan (the original forecast was 85.47 billion yuan and 9.39 billion yuan for 24-25), up 26.88%, 11.40%, and 4.72% year over year, respectively. The corresponding PE is 10.08, 9.05, and 8.64 times, respectively, maintaining the “buy” rating.

Risk warning: macroeconomic downside risk, coal price fluctuation risk, electricity price fluctuation risk, risk of project construction being delayed, risk of investment business profit falling short of expectations, etc.