Jinwu Financial News | According to Guoyuan International Development Research, China Electric Power (02380) achieved revenue of 44.262 billion yuan in 2023, an increase of 1.31%; realized profit attributable to equity owners of 3,084 billion yuan, an increase of 16.48% year on year; realized profit attributable to common shareholders of 2.66 billion yuan, an increase of 7.23% year on year, with a basic profit of 0.22 yuan per share. The company's lower than expected performance was mainly due to water and electricity losses due to poor water supply and the relatively high share of minority shareholders in the acquisition of scenery assets, which reduced the share of net profit returned to mother. In 2023, the company's dividend was 0.132 yuan per share, up 20% year on year, and the dividend ratio was 60%, up 10 percentage points from the 50% dividend rate in 2022.
According to the bank, based on the annual contribution of the acquisition of the Group's Scenery Assets in 2023, Scenery is expected to remain an important source of growth in the company's core profit in '24; the company's hydropower is mainly located in Fujian, Hunan, Guizhou and Guangxi. Water has improved markedly since the first 2 months of 2024. The company's total electricity sales volume was +35.92% year-on-year, of which hydropower increased sharply by 84.34%. Incoming water is expected to improve throughout '24, and the recovery of hydropower profits is worth looking forward to.
The bank said that in 2023, the unit price of the company's comprehensive standard coal was 943.79 yuan/ton, a year-on-year decrease of 11.79%, resulting in a significant recovery in thermal power profits to achieve net profit of 1,315 billion yuan, a significant recovery from 2022 losses of 1,391 billion yuan. Currently, the company's electricity recovery rate is about 96%, and the electricity cost of recycling capacity in the first 2 months of 2024 is about 400 million yuan. It is expected that there will still be some room for coal prices to decline in 2024. After the combined capacity electricity prices are realized, the profit stability of the company's thermal power plants will be further enhanced.
The bank updated the company's target price of HK$4.26, which is equivalent to 9 times and 7 times PE in 2024 and 2025. There is room for a 32% increase in the target price compared to the current price, maintaining the purchase rating.