event:
The company will release the 2023 annual report and 2024 quarterly report. In 2023, the company will achieve a net profit attributable to the parent company of 4.4 billion yuan, a year-on-year increase of 25.17%, which is in line with our expectations. It is proposed to distribute cash dividends of 0.4 yuan per share (tax included), a total of 1.95 billion yuan of cash dividends, with a cash dividend ratio of 44.31%. 1Q24 The company's net profit attributable to the parent company was 1.273 billion yuan, a year-on-year increase of 12.06%, which exceeded our expectations.
Key investment points:
The shortage of water in Sichuan has been alleviated since 2H23, and the hydropower generation capacity of 1Q24 Holdings continues to increase. In the first half of 2023, the Qingyi River and Niger River basins will be dry with little rain, and the water situation will improve in the second half of 2023, driving the rapid recovery of power generation capacity. In 2023, the company will generate 5.231 billion kilowatt hours of electricity, up 9.38% year on year. Among them, the hydropower generating capacity was 4.999 billion kWh, up 6.41% year on year, and the photovoltaic generating capacity was 232 million kWh, up 174.54% year on year. Under the low base in the same period last year, the inflow of major rivers in Sichuan increased from January to February except Anning River. According to the data of Sichuan Hydrology and Water Resources Survey Center, the inflow of Qingyi River in January and February increased by 66.4% and 51.3% respectively. The water inflow is good, driving the power generation of the company's 1Q24 holding hydropower enterprises to increase by 12.72% year-on-year to 753 million kilowatt hours. In terms of electricity price, in 2023, the company's hydropower grid price will be - 2.96% to 0.197 yuan/kilowatt hour respectively year-on-year. According to the annual centralized transaction results of Sichuan electricity market, the average transaction prices of the centralized transactions in 2024 will be 264.56 yuan/MWh, 143.31 yuan/MWh, 270.33 yuan/MWh, and 384.91 yuan/MWh respectively in the annual equilibrium, wet season, normal season, and dry season in Sichuan, including+8.34 yuan/MWh,+5.92 yuan/MWh, and -8.75 yuan/MWh respectively in the wet season, normal season, and dry season. According to the company's business data announcement in the first quarter, the company's hydropower price still increased by 0.35% to 0.283 yuan/kilowatt hour in the dry season, which exceeded market expectations. It is optimistic that the company's profitability will further improve year on year after entering the normal and wet season.
The investment income has steadily increased, and the long-term value of Yalong River and Dadu River companies is optimistic. In 2023, the company's investment income will increase by 22.94% year on year, with an increase of 898 million yuan. Among them, Yalong River Company (holding 48% of shares) saw a 4.8% year-on-year decrease in its power generation due to the shortage of incoming water, but benefited from the increase in the price of electricity sent by Jinguan Power Supply Group to Jiangsu Province and the rise in the market price in the province, the increase in the price of electricity led to an increase of 602 million yuan in the investment income of Yalong River on a year-on-year basis. By the end of 2023, Lianghekou Power Station, the most upstream, will complete the third stage of water storage. From December 2023, the water inflow of the Yalong River basin will increase by more than 30% year on year, and will get out of the dry water dilemma. The investment income of Daduhe Company (holding 20% shares) and China Nuclear Huineng (holding 6.4% shares) also increased by 150 million yuan and 122 million yuan respectively year on year. In the first quarter of 2024, the company's investment income still maintained a growth trend, with a year-on-year growth of 6.14%. Considering that the new energy installed capacity of the company's equity investment project company is in the accelerated construction stage, and large hydropower stations such as Kala Hydropower Station, Mengdigou Hydropower Station, Shuangjiangkou Hydropower Station are under construction, we are optimistic about the long-term steady growth of Sichuan Investment Energy and the power generation of the company. The power supply and demand situation in Sichuan Province is still in short supply, and the current hydropower price is significantly lower than other power sources, so the hydropower station in Sichuan is expected to meet the opportunity of both volume and price rise.
The company actively expanded investment projects, and the installed capacity grew steadily. In 2023, the company successfully delisted the 51% equity project of Guangxi Rong'an Yuchai New Energy Co., Ltd. and increased its stake in Guoneng Daduhe Company by 10%. By the end of 2023, the total installed capacity of the company's shareholding reached 36.53 million kilowatts (excluding Three Gorges Energy, CGN Wind Power and CGN Huineng), and the equity installed capacity reached 16.14 million kilowatts.
Profit forecast and rating: based on the company's 2023 annual report and 2024 first quarter report, we raised the company's 2024-2025 net profit attributable to the parent to 5.151 billion yuan and 5.491 billion yuan respectively (previously 4.918 billion yuan and 5.31 billion yuan), and the new 2026 net profit attributable to the parent to 5.981 billion yuan. The current share price corresponds to PE of 16, 15, and 14 times respectively. Maintain the "buy" rating.
Risk tip: The water supply is not as expected, and the price of new energy continues to decline.
