On September 28, the power sector rose sharply, and the Hong Kong stock green power concept plate rose by more than 5%. As of press time, China Resources Power Holdings is up more than 8%, CGN New Energy and China Power are up more than 7%, Huaneng International Power and Xinjiang Goldwind Science & Technology are up more than 6%.

Some time ago, with the pilot green power trading started, the green electricity plate is very popular in the market. Recently, power cuts have been pulled in many places, highlighting that improving the energy structure will become a long-term trend in the future. Many institutions say they are optimistic about investment opportunities in clean energy power generation, energy storage and other areas. Huatai said that the double carbon target is expected to drive the long-term growth of the new energy power generation industry. How to find targets with excess returns in these segments?

The agency believes that competitiveness will determine the new energy operator α, which can be obtained fromOperational ability, profitability and financing abilityThree-dimensional evaluation.

Operational capabilityElectricity generation is one of the most simple and intuitive indicators to evaluate the competitiveness of new energy operators.To comprehensively reflect the strength of development, investment, construction and operation and maintenance. The power generation can be further reflected inInstalled scale and utilization hours.

ProfitabilityWind power mainly depends on resource endowment and operational efficiency, while photovoltaic mainly depends on financing cost and electricity price.

Although the subsidy of wind power price has declined year by year from 2016 to 2020, thanks to technological progress, economies of scale and lower cost of capital, the average net profit per unit of wind power industry shows an upward trend.

For photovoltaic operation, financing cost and electricity price are the core factors affecting unit net profit.In the future parity of new projects, the advantage of financing costs will be more significant, the head of central enterprises to do large-scale at the same time, is expected to maintain a good profit level.

Financing ability to ensure the sustainability of competitivenessThe level of leverage is the internal constraint of scale expansion, and the financing cost barrier of central government / state-owned enterprises is strong.

The sources of funding for investment in new energy power generation projects include capital (self-owned funds) and project loan financing, with a capital ratio of 20% to 40%. When new energy operators expand, in addition to operating cash flow support, leverage constraints are also one of the important considerations.

thereforeOperators with higher operating cash flow and lower asset-liability ratio have more room for potential expansion in the future.Operators with insufficient operating cash flow and high asset-liability ratio will have to reduce the level of leverage through additional issuance, debt-to-equity swap and other ways.

Based on the measurement of operating cash flow in 2020 and the asset-liability ratio at the end of June 2021, the institution believes thatHuaneng International, China Resources Power Holdings, China Longyuan Power Group Corporation, three Gorges Energy's wind power or photovoltaic scale expandable space is relatively leading.

Generally speaking, from a medium-and long-term perspective, Huatai said that three types of new energy operators are expected to reflect the alpha attribute:

1) the leader of new energy operators with the rapid growth of installed scaleIncluding China Longyuan Power Group Corporation (the only new energy platform of the State Energy Group) and three Gorges Energy (the only new energy platform of the three Gorges Group)

2) the target of traditional energy transformationIncluding Huaneng International, China Resources Power Holdings, Guotou Electric Power and Funeng

3) Regional operators that occupy high-quality resourcesThe typical targets are Funeng and Zhongmin Energy.

Taking into account the current valuation level, the agency givesChina Resources Power HoldingsTarget price HK $26.40State Investment Electric PowerWith a target price of 12.40 yuan, thermal power provides sufficient cash flow for the development of new energy, and there is a double improvement logic of valuation and performance in the stock price.