Starting from the end of 2021, we will mainly focus on 5 hydropower companies such as Changdian, Huaneng, Qianyuan Power, Guiguan Power and China Southern Power Grid Energy Storage, and basically go through the fundamentals and come to the conclusion that the valuations are high, and the 2023 annual report has been issued to see what changes there are, continue to track and learn, and wait for the emergence of investment opportunities.
Among them, Huaneng Sichuan Company was acquired in mid-2023 and included in the company's consolidated statements in September 2023, with a purchase price of 8.578 billion yuan, Sichuan Huaneng's total assets of 5.58 billion yuan, liabilities of 1.95 billion yuan, net assets of 3.63 billion yuan, and a purchase price-to-book ratio of 2.36 times.
Huaneng Sichuan Company has a total of 17 subsidiaries, of which 9 are hydropower stations, with an installed capacity of 2.651 million kilowatts, of which 1.116 million kilowatts of Luding Hydropower Station will be put into operation in June 2025, totaling about 3.77 million kilowatts of hydropower assets, and some others are ignored.
According to the 2023 annual report, the revenue was 23.4 billion yuan, a year-on-year decrease of 0.51%, the net profit was 7.638 billion yuan, a year-on-year increase of 5.58%, and the installed capacity was 27.52 million kilowatts, a year-on-year increase of 16.8%, an increase of about 3.96 million kilowatts year-on-year, minus the acquisition of 2.65 million kilowatts of hydropower from Sichuan Huaneng, and its own growth of 1.31 million kilowatts, of which all were the increase in new energy installed capacity (1.92 million-610,000 = 1.31 million), The annual power generation was 107.06 billion kWh, a year-on-year decrease of 4.04%, the annual power generation utilization hours were 3968, a year-on-year decrease of 7%, and the average settlement electricity price was 0.2191 yuan/kWh, an increase of 3.6% year-on-year.
Huaneng Hydropower is still dominated by hydropower, and it can be known from the power generation that hydropower will account for 99% of the power generation in 2023, so don't look at what the company says, for a long time in the future, I estimate that it will also be the main business analysis of the hydropower company.
In terms of installed capacity, wind power has basically not changed, and photovoltaic has increased by about 1.6 million kilowatts, bringing up a total of 1.92 million kilowatts. The company's annual reports over the years show that from 2021 to 2022 and 2023, hydropower and new energy will be the core business, indicating that the company's recent growth pole is in new energy, in fact, it is also the hydropower station on the Lancang River that is easy to develop has been completed, and the current midstream Toba hydropower station is under construction, and the planned installed capacity of Toba hydropower station is 1.4 million kilowatts, even if it is put into operation, it has only increased by about 5% of the total installed capacity, and the increment is really limited, and the annual report shows that it is still under construction. By the end of 2023, the progress of the project will be about 45%.
Other Gushui, Bondo, Rumei, Olive Dam and Banda Hydropower Station are all carrying out preliminary work, from the construction of the project, it can be seen that the largest investment is 2.7 billion yuan for Rumei, 1.5 billion yuan for Gushui Hydropower Station, should still be in the preliminary work, has not entered the substantive construction, for the construction cycle of ten years and eight years, it is too early to consider. (Last year's annual report also showed that the progress of the project was deleted this year, what does it mean.) ）
In 2023, the company's net profit will be 7.12 billion yuan, with a dividend rate of 45.1%, of which the dividend will be about 3.24 billion yuan, with a dividend of 0.18 yuan per share, and a dividend yield of about 1.93% at the current price of 9.3 yuan (7.2 yuan last year), as shown in the following table according to the situation in previous years:
The dividend yield is around 50%, and for this kind of company that does not have a lot of incremental stable power generation, the dividend yield is one of the good indicators to buy. According to this indicator, it is estimated that the net profit for the whole year of 2023 will be 8.7 billion yuan (institutional forecast), then the dividend of 50% will be 0.25 yuan per share, the dividend yield of 4% will be bought, the corresponding stock price will be 6.25 yuan, and the corresponding stock price of 3% dividend yield will be 8.3 yuan.
In 2023, the company's revenue will be 23.4 billion yuan, and the main expenses are as follows:
1 operating cost of a total of 10.2 billion yuan, mainly by the cost of power generation and depreciation, of which the depreciation of fixed assets is 5.6 billion yuan, then the remaining power generation cost of 5.2 billion yuan, according to the cost of power generation calculation, water charges account for the majority, water charges are divided into water resources fees and reservoir area maintenance funds, basically accounting for about 15% of the operating costs, adding up to about 1.5 billion yuan, the remaining 3.7 billion yuan is other fixed expenses, every year, basically little change.
2 The three fees are a total of 3.5 billion yuan, mainly for financial interest expenses, 2.73 billion yuan in 2023, and the management fee is 540 million.
3 taxes and fees of 1.6 billion yuan, in fact, this is not accurate, this is just the data of this time node, according to the cash flow statement, a total of 5.668 billion yuan will be paid in 2022, of which the corporate income tax is about 1.1 billion yuan, and the other period taxes are 500 million yuan, and the rest should be the value-added tax paid on behalf of the company, a total of about 4 billion yuan, the feed-in tariff is not value-added tax, that is to say, the operating income does not include value-added tax, but the company collects and pays on behalf of the tax bureau, which is generally levied at 13%. As for the tax rebates for wind power, photovoltaic and new power stations, etc., there is not such a large proportion, which is ignored and does not affect the overall judgment.
4. The dividend is 3.2 billion yuan, and the dividend rate is about 45%, which is stable.
5. Retained profits of 4.3 billion yuan, a little more than last year, may buy equipment to build substations, may also repay loans, may also be retained as distributable profits rolling, in short, there is no reference value at this stage.
In 2023, Huaneng Hydropower's operating performance is good, and 2024 is expected to have similar results. Among them, in the 2023 annual report, the overall year-on-year dryness of the water from the Lancang River, and the water in 2023 is not too ideal, and the summary of the water over the years since its listing is as follows:
The business of relying on the sky to eat, just wait quietly for the years when the water is abundant, this is the fate of hydropower stocks, and it is not okay to be in a hurry.
Outlook for 2024
The report basically doesn't say anything about the outlook for this chapter, and I will summarize some of the things I have seen in the annual report:
2024 should be a dull year for Huaneng Hydropower, and this is another year after the Toba Hydropower Station can not be put into operation, mainly for the above several hydropower stations to accelerate the progress of investment, photovoltaic and wind power construction period is relatively fast, but wind power does not seem to be able to grow, photovoltaic growth is quite a lot, electricity prices are down, for more than 20 million installed capacity of Huaneng Hydropower, basically belongs to the range of growth is not obvious.
In 2023, the revenue will most likely exceed 23.5 billion yuan, the bulk of the fixed cost is still about 3 billion yuan of financial expenses, 12 billion yuan of operating costs (including depreciation of 6 billion yuan), and the operating profit is probably a little more than this year, 50% of the dividend, that is, 0.25 yuan per share, even if it is more, buy if there is a suitable opportunity, wait if there is no suitable opportunity, or wait until the dividend yield of more than 3% I will buy, still maintain this point of view, if there is no opportunity, just wait, continue to wait.
There are two opinions on Huashui's annual report, I feel that the company intends to avoid the problem, one is that it will no longer announce the amount of capital expenditure budget in 2024, and the second is that there is a lot less progress in the construction project. In a word, the page number of Huaneng Hydropower's annual report in 2023 has increased, but the required content is somewhat missing, so continue to pay attention to this.
Huaneng Hydropower's 2022 annual report analysis and valuation
Analysis of the valuation of Lancang Huaneng Hydropower, which is rumored to have great potential, at this stage