ZZEPC(600023) 广发证券·2024-05-06 02:02Investment Rating - The investment rating for the company is "Buy" with a target price of 7.53 CNY per share, indicating a potential upside from the current price of 6.23 CNY [1][30]. Core Views - The company has significantly improved its performance, achieving a net profit of 6.52 billion CNY in 2023, compared to a loss of 1.83 billion CNY in the previous year, driven by lower coal prices and improved fuel costs [4][12]. - The company added 2GW of coal-fired power capacity in 2023, bringing its total coal-fired capacity to 35GW, which is expected to enhance its asset growth [19][25]. - The company maintains a high return on equity (ROE) exceeding 10% and is expected to continue growing its net assets due to ongoing investments and operational improvements [25][30]. Summary by Sections 1. Performance Improvement - In 2023, the company reported a revenue of 95.975 billion CNY, a year-on-year increase of 19.7%, and a net profit of 6.52 billion CNY, marking a turnaround from a loss in the previous year [4][12]. - For Q1 2024, the company achieved a revenue of 200.24 billion CNY, up 13.5% year-on-year, and a net profit of 1.815 billion CNY, reflecting a 79.6% increase [4][6]. 2. Capacity Expansion - The company’s coal-fired power generation capacity reached 34.9GW by the end of 2023, with the addition of 2GW from the new coal power units [19][25]. - The company is actively pursuing further capacity expansions, with ongoing projects expected to increase total coal-fired capacity to over 40GW [25][30]. 3. Financial Metrics - The company’s gross margin and net margin improved significantly in 2023, with gross margin at 9.4% and net margin at 6.8%, recovering from negative margins in the previous year [6][21]. - Investment income reached 4.6 billion CNY in 2023, accounting for over 70% of the net profit, primarily from investments in nuclear and thermal power [12][29]. 4. Dividend Policy - The company plans to distribute a cash dividend of 2.5 CNY per share for 2023, totaling 3.352 billion CNY, which represents a payout ratio of 51.42% and a dividend yield of 5.42% based on the year-end share price [17][30]. 5. Future Outlook - The company is projected to achieve net profits of 8.781 billion CNY, 9.416 billion CNY, and 10.056 billion CNY for 2024, 2025, and 2026 respectively, with corresponding price-to-earnings ratios of 9.51, 8.87, and 8.31 [30][31]. - The company is expected to benefit from the implementation of a two-part electricity pricing system starting in 2024, which could provide additional capacity compensation of over 1.841 billion CNY [27][28].