Events:

The company releases first-quarter results for 2022. The company's revenue in the first quarter of 2022 was 10.422 billion yuan, an increase of 4.76% over the same period last year, and its net profit was 2.258 billion yuan, down 22.88% from the same period last year.

Comment

Focus on the layout of the new energy track, the wind power installation has reached 25.66GW

The company focuses on the layout of the new energy racetrack. By the end of March 2022, the company's holding installed capacity has reached 28.7 million kilowatts, including 25.66 million kilowatts of wind power, 1.875 million kilowatts of thermal power and 116 million kilowatts of other renewable energy. In the first quarter of 2022, the company completed a total of 18.217 billion kilowatt-hours of electricity generation, an increase of 4.83% over the same period in 2021. Of this total, wind power generation increased by 5.13 percent, thermal power generation decreased by 0.64 percent, and other renewable energy generation increased by 58.97 percent. 2022Q1 achieved 10.422 billion yuan in revenue, an increase of 4.76 percent over the same period last year. From the perspective of sub-business, the revenue of wind power segment (excluding franchise service income) was 7.072 billion yuan, down 4.39% from the same period last year, that of thermal power was 3.159 billion yuan, up 32.29% from the same period last year, and that of other segments was 180 million yuan, up 42.86% from the same period last year.

22Q1 performance has declined, and high project reserves support future performance growth under the influence of the decline in utilization hours and the increase in depreciation amortization and other related expenses caused by the conversion of wind turbines in 2021, the company's profitability declined in the first quarter of 2022, with an operating profit margin of 41.91%, down 8.92 percentage points from the same period in 2021. In addition, the investment income of the superimposed company in joint ventures and joint ventures decreased compared with the same period last year, and the company's net profit in the first quarter of 2022 decreased by 22.88% to 2.258 billion yuan compared with the same period last year. The company has sufficient project reserves, and in 2021, in the organized competitive configuration throughout the country, the company won the bid capacity of 9465 MW, of which wind power 2172 MW, photovoltaic 6113 MW, grid side energy storage 1180 MW ╱ 1920 MW hours, distributed project record 4900 MW, plus clean heating projects 4000 MW, the cumulative development target for the whole year exceeded 18365 MW, which is expected to support continuous expansion of future performance.

Through the absorption and merger of A shares, the group's wind power assets are expected to accelerate the integration of China Longyuan Power Group Corporation's A shares by issuing A shares to all the conversion shareholders of Pingzhuang Energy, so as to obtain the qualification of A share listing; and officially listed on the Shenzhen Stock Exchange on January 24, 2022.

China Longyuan Power Group Corporation's cash purchase of new energy assets of the State Energy Group reduces the potential business overlap of the new energy business between China Longyuan Power Group Corporation and the State Energy Group, thereby improving the independence of listed companies; at the same time, it also helps China Longyuan Power Group Corporation to integrate resources and enhance the competitiveness of enterprises. In addition, the State Energy Group clearly uses China Longyuan Power Group Corporation as the integration platform for the wind power business of the State Energy Group, and gradually injects the wind power business assets controlled by the group into China Longyuan Power Group Corporation, which is expected to speed up the development of the company.

Profit forecast and valuation

Taking into account the company's business expansion, the company's 2022-2024 return net profit is expected to be 75x88 / 9.7 billion yuan, corresponding to PE times 17-15-13, maintaining a "buy" rating.

Risk tips: the risk of a sharp downturn in the economy; the risk of electricity price reduction; the risk that policy implementation is not as expected; the risk of excessive competition in the industry; the risk of persistent default of subsidies, etc.