Description of the event
The company released its 2023 annual report and 2024 quarterly report: in 2023, the company achieved operating income of 26.485 billion yuan, an increase of 11.23% over the previous year; realized net profit of 7.181 billion yuan, an increase of 0.94% over the previous year. In the first quarter of 2024, the company achieved operating income of 7.899 billion yuan, a year-on-year increase of 15.26%; realized net profit to mother of 2,422 billion yuan, an increase of 0.1% over the previous year.
Incident comments
The main business performance was steady, and the growth rate of performance was limited by impairment and investment income. In 2023, the company added 13.5356 million kilowatts of grid-connected installed capacity; the total installed capacity of the company reached 40.44,400 kilowatts, an increase of 50.99%, including 13.925 million kilowatts of onshore wind power, 5.4916 million kilowatts of offshore wind power, and 1982.42 million kilowatts of photovoltaic installations. The company still maintains the leading position of the country's largest offshore wind power operator. Driven by the expansion of installed capacity, the company completed 55,179 million kilowatt-hours of electricity generation throughout the year, an increase of 14.12% over the previous year. The new installations were mainly concentrated at the end of the year. Due to the increase in the share of affordable projects, the company's annual average feed-in price was 0.488 yuan/kilowatt-hour (excluding tax), a year-on-year decrease of 2.81%. Overall, the strong performance of electricity still enabled the company to achieve annual revenue of 26.485 billion yuan, an increase of 11.23% over the previous year. Due to affordable projects and poor lighting conditions, the company's annual gross margin was 55.13%, a year-on-year decrease of 3.27pct. Some of the participating wind power companies weakened, and the annual investment income was 715 million yuan, a sharp decrease of 47.48% over the previous year. Furthermore, the company added credit impairment to renewable energy electricity prices, bringing the company's credit impairment amount to 553 million yuan, further limiting the company's performance. Overall, under the constraints of a year-on-year decline in investment income and credit impairment, the company achieved net profit of 7.181 billion yuan, an increase of 0.94% over the previous year.
The expansion of the fleet led to a steady increase in revenue, and performance was limited by investment income and stock ratios. In the first quarter of 2024, driven by a large number of new installations last year, and the company's wind power and photovoltaic resources were superior to the same period last year, the company's power generation capacity reached 17.735 billion kilowatt-hours, an increase of 28.69% over the previous year. However, since all of the new projects are affordable, and the electricity prices of the projects are expected to be under pressure due to the influence of marketization, the company's revenue in the first quarter reached 7.899 billion yuan, up 15.26% year on year, but gross margin was 58.96%, up 0.16 percentage points year on year. In addition, the company's investment income continued to be weak. Investment income for the first quarter was 164 million yuan, a year-on-year decrease of 50.23%. The sharp decline in investment income may also be due to weak wind power companies participating in wind power companies. Overall, due to the sharp decline in investment income, the company's net profit for the first quarter was 2,891 billion yuan, up 4.38% year on year, and net profit to mother was 2,422 billion yuan, up 0.1% year on year. The weak growth rate of net profit to mother may be mainly due to the increase in minority shareholders' share in new projects last year.
Reserve resources guarantee growth, and the increase in shareholders' holdings shows confidence. By the end of 2023, the company's projects under construction were 18.768 million kilowatts, and an additional 264.992 million kilowatts of installed capacity were approved and registered in 2023. Large-scale reserve projects are sufficient to support the company's sustained high growth in installed capacity. Therefore, although the company's short-term performance is under pressure, the logic of long-term steady growth still exists. We believe that the company's performance is also expected to maintain a high level of growth driven by rapid growth in installed capacity. Furthermore, the company disclosed on October 16 that the Three Gorges Group, the controlling shareholder of the company, plans to increase its holdings of the company over the next 12 months, with an increase of no less than 300 million yuan and no more than 500 million yuan. The controlling shareholders' plan to increase their holdings shows sufficient confidence in the company's long-term development.
Investment advice: According to the latest financial data, we expect the company's EPS in 2024-2026 to be 0.29 yuan, 0.33 yuan, and 0.37 yuan, corresponding PE will be 16.96 times, 14.81 times, and 13.06 times, respectively, maintaining a “buy” rating.
Risk warning
1. The risk that the progress and benefits of the commissioning of new construction projects fall short of expectations;
2. Wind conditions and lighting resources fall short of expected risks.