Wind power and solar energy industries usher in long-term and rapid development opportunities from 2012 to 2021. China's macro-economy has grown steadily. The country's installed power capacity has increased from 1146.55 GW in 2012 to 2376 GW in 2021, with a compound annual growth rate of about 8.43%. The compound growth rates of thermal power, hydropower, nuclear power, wind power and solar power are 5.23%, 5.12%, 17.40%, 20.48% and 64.85%, respectively. The installed capacity of wind power and solar power is growing at a high speed. In the proportion of national power installed structure, the installed proportion of wind power and solar power increased from 5.66% in 2012 to 26.72% in 2021, while that of thermal power decreased from more than 70% in 2012 to 54.58% in 2021. The effect of carbon emission reduction is obvious.
According to China's climate target of "30ram60", by 2030, non-fossil energy will account for about 25% of primary energy consumption, and the total installed capacity of wind power and solar power will reach more than 1200 GW. Based on this, it is conservatively estimated that the installed capacity of wind power and solar power in China will grow at a compound annual growth rate of 7.34% from 2022 to 2030. We believe that under the background that carbon emission reduction has become a national strategy, the installed capacity of wind power and solar new energy has great potential, and the wind power and photovoltaic installed capacity in 2030 is expected to be completed ahead of schedule and exceeded, and the installed growth rate of wind power and photovoltaic is likely to be greatly improved.
China Longyuan Power Group Corporation's main operation and financial data
As of March 31, 2022, China Longyuan Power Group Corporation's total installed capacity is about 28.70GW, including wind power holding capacity 25.66GW, thermal power 1.88GW, and other renewable energy 1.16GW. Since 2015, the company has steadily ranked first in the world in terms of wind power installation, and has become the largest wind power operator in the world.
From 2017 to 2021, the company's wind power installed capacity increased steadily, and the CAGR of wind power equity installed capacity and holding installed capacity were 5.02% and 6.50%, respectively. As of December 31, 2021, China Longyuan Power Group Corporation's operating income from the three business divisions of wind power, thermal power and other renewable energy was 239.68 yuan, 124.61 yuan and 1.111 billion yuan respectively, and the segment profits were 123.54 yuan, 3.51 yuan and 41 million yuan respectively. In 2021, the company's revenue and segment profits from wind power accounted for 64% and 96.9%, respectively. During the 14th five-year Plan period, driven by the goal of "double carbon", we expect the company's wind power and solar power holding capacity to grow by leaps and bounds.
National Energy Group accelerates the construction of new energy projects
The company's major shareholder, National Energy Group, is the world's largest coal production company, thermal power company, wind power company and coal-to-oil and coal chemical company. In terms of installed capacity, by the end of 2020, the total installed capacity of the National Energy Group reached 257.13GW, of which wind power installed capacity 46.04GW, accounting for 17.90% of the group's total installed capacity; solar energy and other (biomass energy, tidal energy, geothermal energy and ocean energy, etc.) installed capacity 1.69GW, accounting for 0.66% of the total installed capacity. China Longyuan Power Group Corporation is the main body of the renewable energy development, construction and management of the National Energy Group. Driven by the goal of "double carbon", in order to change its low proportion of clean energy installation, the National Energy Group will vigorously open up the new energy market, and the Group plans to achieve new new energy installed 70-80GW by the end of the 14th five-year Plan.
Profit forecast and valuation
Combined with the pace of industry installation and the resources held by the company, we estimate that the company's operating income from 2022 to 2024 will be 415.06 yuan, 475.01 yuan and 52.859 billion yuan respectively, and the net profit will be 87.79 yuan, 105.17 yuan and 12.308 billion yuan respectively, and the corresponding EPS will be 1.05,1.25,1.47 yuan respectively. Using the discounted cash flow method, we calculate that the reasonable equity value of the company is about 144.337 billion yuan, equivalent to HK $20.31 per share (exchange rate: HK $1 = 0.8479 yuan). The sensitivity analysis of the sustainable growth rate of 3.0% and WACC (6.27%) shows that the reasonable value range of the company is HK $17.63mur25.64, corresponding to the dynamic PE of 16.8 Mel 24.4 times and the dynamic PB of 2.1 Mel 3.0 times in 2022.
Risk hint
Wind power, solar energy and other new energy installation is not as expected; the group's new energy asset integration is not as expected; and the allocation of subsidies receivable is much lower than expected.