Event: China Min Energy released the mid-2022 report, 2022H1 achieved a total operating income of 923 million yuan, year-on-year + 22.52%, home net profit of 419 million yuan, year-on-year + 24.45%, the company's first-half gross profit of 67.28%, year-on-year-0.30pct. Affected by the narrowing growth rate of 2022Q2 power generation, the operating income is 372 million yuan, + 4.97% compared with the same period last year, and the net profit is 129 million yuan, which is-11.86% compared with the same period last year. Q2 gross profit margin is year-on-year-6.75pct, month-on-month-16.57pct, and net interest rate is-19.25pct. Combined with the operating data, our comments are as follows:

Business data analysis: wind power and biomass generating units have been put into production, and 2022H1 power generation is + 23.85% compared with the same period last year. By the end of 22H1, the company had completed 1.611 billion kilowatt-hours of electricity generation, + 23.85% year-on-year, 1.566 billion kilowatt-hours of Internet power, + 23.47% year-on-year electricity consumption, of which Q1/Q2 completed 944 million kilowatt-hours of electricity generation, with 10.43% of the same amount of electricity generated compared with the same period last year. The year-on-year increase in power generation is mainly due to: 1) the installed scale is + 12.72% compared with the same period last year. As of the end of 22H1, the company's holding grid-connected installed capacity was 957300 kilowatts, + 12.72 percent year-on-year; of which wind power / photovoltaic / biomass power generation was 90.73 / 20000 kilowatts respectively, with an increase of 7.80 pounds / 200,000 kilowatts over the same period last year. 2) the utilization hours of wind power in Fujian increased compared with the same period last year. The utilization hours of Fujian Land Wind, Fujian Haifeng and Heilongjiang Wind Power of 22H1 Company are 1658, 2040 and 1255 hours respectively, compared with the same period last year, which are 1154 hours higher than the domestic average, and maintain strong resource endowment advantage and operation and maintenance management advantage. Min Haidian 2022H1, a subsidiary holding Pinghai Bay Phase I and II projects, has a net profit of 211 million yuan, with a net interest rate of 47.92%, a year-on-year 6.57pct, corresponding to ROE (diluted) 10.16%.

Marginal outlook: the shareholder's project is progressing smoothly, waiting for the injection of 2.41 million kilowatts of assets. According to the commitment of the company's controlling shareholder investment group, when Putianping Bay Offshore Wind Power Phase III (308 million kilowatts), Mintou pumped storage (1.2 million kilowatts), Ningde Xiapu Offshore Wind Farm A, B, C (900,000 kilowatts) and other projects are profitable and other conditions are met, the opportunity will be injected into the listed company. If fully injected in the future, the installed capacity of the company is expected to increase to 3.3653 million kilowatts, an increase of 251.54% over the existing installed capacity. According to the company's April announcement, the Pingwan Phase III project is currently in a normal state of power generation, the Xiapu area B project was approved last year, and the shareholder's project is progressing smoothly. Considering the late asset injection, the company is expected to achieve rapid improvement in performance in the future.

Investment suggestions: 1) as a local sea breeze operator in Fujian Province, benefiting from the advantages of local resource endowment, the utilization hours of unit power generation are higher than the national average all the year round; 2) the project injection company under shareholders is expected to bring large-scale growth in installed capacity in the future. We adjusted the company's homing net profit forecast for 2022-2024 to RMB 1.487 billion respectively, with a growth rate of + 31.3%, 48.0% and 16.5%, respectively, corresponding to the closing price of 14.9x/10.0x/8.6x on August 31, maintaining the "prudent overweight" rating.

Risk hint: shareholder project injection into the company is not as fast as expected, electricity price fluctuation risk, power consumption risk, macroeconomic risk.