HEGC(000883) 广发证券·2024-05-07 08:02Investment Rating - The report maintains a "Buy" rating for Hubei Energy [4]. Core Views - The company's net profit for 2023 is projected to be CNY 1.749 billion, a year-on-year increase of 50.4%, with Q1 2024 net profit expected to reach CNY 780 million, reflecting a significant year-on-year growth of 151% [2][10]. - The improvement in profitability is attributed to better water inflow, a decrease in coal prices, and increased generation from renewable sources [2]. - The company plans to divest stakes in Changjiang Securities (9.58%) and Yinkou Energy Investment (65%), which is expected to enhance investment income and support reinvestment [2]. Summary by Sections 1. Profit Recovery and Performance Improvement - The company experienced a 9.3% decline in revenue to CNY 18.669 billion in 2023, while net profit rose by 50.4% to CNY 1.749 billion [10]. - The increase in profitability is driven by improved water inflow, reduced coal prices, and higher output from renewable energy sources [10]. 2. Generation Capacity and Output Growth - As of the end of 2023, the company had a total installed capacity of 15.67 GW, with a year-on-year increase of 26.3% [18]. - The total generation for 2023 was 357 billion kWh, a 4.6% increase, with hydropower generation up by 10.8% to 110 billion kWh [18][20]. 3. Collaborative Development of Energy Sources - The company plans to expand its total installed capacity to over 22 GW by the end of the 14th Five-Year Plan, with significant projects in hydropower, thermal power, and renewable energy [22]. - Key projects include the completion of two 1,000 MW thermal power units and various renewable energy initiatives [22][23]. 4. Valuation and Growth Potential - The projected net profits for 2024 to 2026 are CNY 3.025 billion, CNY 3.226 billion, and CNY 3.471 billion, respectively, with corresponding PE ratios of 12.31, 11.54, and 10.73 [24]. - The report suggests a target price of CNY 7.42 per share based on a 16x PE valuation for 2024 [24].