The country's new solar installations in 2021 are expected to be around 50 gigawatts. Investment in solar energy projects in the first 11 months of 2021 increased 34.9% year-on-year to RMB 51.3 billion, accounting for about 12% of the total investment in power projects during the maturity period. Solar energy installed during the period reached 34.83 gigawatts, an increase of 34.5% over the previous year or 8.93 gigawatts more than the previous year. Furthermore, the China Photovoltaic Industry Association announced in mid-December that it predicts that new domestic PV installations in 2021 will be between 45 and 55 gigawatts, where the value is 50 gigawatts, which means a year-on-year increase in the number of new PV installed units.

The sale of solar assets is nearing completion, and the hydrogen energy business will become the company's new focus. GCL New Energy announced on December 19, 2021, that the total solar asset capacity it sold in 2021 was about 2.9 gigawatts, and the cumulative solar capacity sold was about 6.4 gigawatts. Asset sales in 2021 are expected to bring in more than RMB 9.3 billion in cash flow. After all of the receivables from the sold power plants have been recovered and the debts of all of its subsidiary holding platform companies have been settled, the company plans to use the remaining funds to develop the hydrogen energy business. The company will focus on the direction of Blue Hydrogen and ancillary products, and Ryokuden's hydrogen production.

Due to uncertainty about this new business, we maintained a “neutral” investment rating and adjusted our target price to HK$0.25.

Our new target price is equivalent to 39.4 times/18.0 times/14.0 times the price-earnings ratio 2021 to 2023 or 0.5 times/0.3 times/0.2 times the net market ratio from 2021 to 2023, respectively.