The national energy group's new energy main platform, covering the "buy" rating China Longyuan Power Group Corporation for the first time, has four unique advantages: 1) the central enterprise National Energy Group's new energy main platform, which can fully integrate the group's resources; 2) the global wind power leading position is strong. Since 2015, the installed scale continues to be in the first place; 3) the wind power project covers 32 provinces and cities in China, and has a first-mover advantage in resource acquisition and project development. 4) the leverage ratio is stable, and the financing channels are greatly broadened after returning to A-shares. It is estimated that the mother net profit of the company in 2022-24 is 95.13 billion yuan for 80amp and 1.131.34 for EPS 0.95. The company has a leading position in the industry, its profitability is better than that of its peers, and the asset injection increment is considerable, giving 2022 30xPE (Wind consensus expected comparable average 24x) with a target price of 28.50 yuan. First coverage, "Buy" rating.
Scale expansion drives performance growth and diversified development consolidates the leading edge. In 2018-21, the company's installed wind power capacity increased from 18.9GW to 23.7GW (CAGR=6%), and wind power operating income increased from 18.4 billion yuan to 24.1 billion yuan (CAGR=7%). The expansion of the installed scale of new energy drives the growth of performance. From 2016 to 2021, the operating income increased from 21.8 billion yuan to 37.2 billion yuan (CAGR=11%), and the return net profit increased from 3.6 billion yuan to 6.4 billion yuan (CAGR=12%). As the main platform of new energy of the National Energy Group, Longyuan plays a core role in achieving the double carbon goal of the group, accounting for 48% of the installed capacity of new energy in the group in 2020. While consolidating the leading advantage of wind power, the company strengthens the efficient and rapid development of photovoltaic. We expect that wind power / photovoltaic installed capacity will reach 35.6C18.6GW respectively in 2025. The group promises to inject wind power assets into the company one after another within 3 years, with a significant increase.
The value of scenery operators is undervalued, and the subsidy is expected to repair ROE's current major scenery operators. The implied installation of CAGR in 2022-2025 is 20%, and that of China Longyuan Power Group Corporation is 22%, which is no less than the 13% growth rate of thermal power installation in 2003-05. Due to the high arrears of new energy subsidies, accounts receivable and financial costs are relatively higher, suppressing scenery operator ROE. Financial support has been strengthened since 2021, and the problem of new energy subsidies is expected to be finally solved. China Longyuan Power Group Corporation was owed the highest scale of subsidies, 25.1 billion yuan at the end of 2021; if fully recovered, we estimate: 1) can pry CAPEX about 83.7 billion yuan, equivalent to the sum of 2016-2021; 2) invalid funds occupy a reduction, is expected to increase 11% of pre-tax profits (2021), leading to a significant rebound in ROE.
The profitability is better than that of peers, and the potential increment of asset injection is considerable.
The average PE of comparable companies in 22 years is 24x (Wind consensus expectations). China Longyuan Power Group Corporation's current share price corresponds to the 22-24 year PE 23max 19xPB 2.5max 2.0x. The company occupies a leading position in the new energy power generation industry, and the ROE in 22-24 (11.6 Universe 12.1max 13.0%) is better than the peer average (10.2 Universe 11.4 Universe 12.7% Magna consistent expectations). As the group's main new energy platform, the potential increase in asset injection is considerable.
Optimistic about the company's solid leading position and stronger profitability, give the 22-year 30x target PE (relative premium 6x), corresponding to the target price of 28.5 yuan per share. For the first time, coverage gives a "buy" rating.
Risk hints: the impact of the epidemic on the progress of projects under construction; the incoming wind is not as expected; the risk of rising abandonment rate; the risk of rising coal prices; the risk of electricity price reduction; the speed of repayment of renewable energy subsidies is not as fast as expected.