Incident: Company discloses 2024 mid-year report. In the first half of the year, the company achieved revenue of 15.059 billion yuan, a year-on-year increase of 9.89%; net profit to mother was 4.039 billion yuan, a year-on-year decrease of 10.58%.

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H1 added 1.3 GW of installed capacity, and the scale under construction reached 23 GW at the end of June

In the first half of 2024, the company added 1.3264 million kilowatts of installed capacity, with a cumulative installed capacity of 41.3708 million kilowatts; of these, the cumulative installed capacity of wind power reached 19.6246 million kilowatts (the cumulative installed capacity of offshore wind power was 5.6864 million kilowatts, accounting for 14.90% of the national market share); the cumulative installed capacity of solar power reached 20.5826 million kilowatts. By the end of June, the company plans to have a total installed capacity of 23.477 million kilowatts, including 5.5114 million kilowatts of wind power, 13.3456 million kilowatts of solar power, 3.6 million kilowatts of pumped storage, and 1.02 million kilowatts of independent energy storage. In addition, in the first half of the year, the company added 1.4412 million kilowatts of approved/registered project capacity, of which 0.2 million kilowatts were wind power projects, and the rest were solar power projects.

Wind power volume increased year over year, H1 revenue +10% year over year

In the first half of 2024, the company's average utilization hours of wind power were 1,243 hours, a year-on-year decrease of 10 hours; the average utilization time of solar power generation was 693 hours, a decrease of 12 hours over the previous year. Combined with the increase in installed capacity, wind power generation increased 12.04% year on year to 23.058 billion kilowatt-hours in the first half of the year, and solar power generation increased 73.28% year on year to 12.618 billion kilowatt-hours. Overall, in the first half of the year, the company achieved 36.118 billion kilowatt-hours of power generation, an increase of 28.58% over the previous year; when combined with a decline in electricity prices, the company achieved revenue of 15.059 billion yuan, an increase of 9.89% over the previous year.

Affected by the decline in landscape resources, etc., the company's performance is under pressure

On the cost side, the new grid-connected project in 2023 was put into operation in the first half of '24. Depreciation of fixed assets and increased operating costs of the project led to an increase in the company's operating costs. The company's operating costs in the first half of the year were 6.674 billion yuan, an increase of 18.27% over the previous year. The company's expense ratio decreased slightly by 0.34 pct during the first half of the year, mainly due to a 0.43 pct year-on-year decrease in the financial expense ratio, and a slight increase in other expenses. Furthermore, the company achieved investment income of 0.342 billion yuan, a year-on-year decrease of 18.59%. Taken together, the company achieved net profit of 4.039 billion yuan to mother, a year-on-year decrease of 10.58%.

Profit Forecast and Valuation:

Taking into account the company's installed capacity growth, landscape utilization hours, etc., the profit forecast was lowered. The company's net profit for 2024-2026 is estimated to be 7.8, 8.7, and 9.7 billion yuan (previous values were 8.8, 9.9, 11.3 billion yuan), corresponding to PE of 15, 14, and 12 times, maintaining a “buy” rating.

Risk warning: the risk that policy progress falls short of expectations, the pace of subsidy payment has slowed drastically, technological progress in the industry has slowed down, industry competition has intensified, company development projects fall short of expectations, etc.