The new energy strategy is progressing steadily. As of August 2022, the company has put into operation a total of 1.80 GW of installed capacity, of which hydropower/wind power/photovoltaic power generation was 0.31 GW/0.72 GW/0.76 GW respectively. In February, the company reached a strategic cooperation with the Wuhai Municipal Government of Inner Mongolia and Xingbang Technology to jointly invest in the hydrogen power industry chain, with an estimated total investment of 168-18.8 billion yuan; in June, a framework agreement was reached with Dayou Agriculture to jointly establish a 10 billion yuan clean energy industry fund; in August, it plans to invest 512 million yuan in the first phase of the 100 MW photovoltaic power storage and power generation project in Bachu County; in September, it plans to invest 5.196 billion yuan in the 800MW photovoltaic+ energy storage market-connected project in Bachu County. RMB 2,492 million for the 400MW photovoltaic+ energy storage market-based grid-connected project in Avati County.
The restructuring with Construction Engineering Group is progressing smoothly. The company plans to purchase 100% of the shares of Construction Engineering Group held by Construction Engineering Holdings in a fixed increase, at a price of 10.497 billion yuan. Construction Engineering Holdings commits China Construction Engineering Group to achieve net profit of no less than 996 million yuan/1,046 million yuan/1,095 million yuan/1,133 million yuan from 2022 to 2024 and 2025 (if involved), otherwise performance compensation will be provided. Construction Engineering Group is the core business asset of Construction Engineering Holding's construction sector. After the restructuring is completed, it will further resolve competition issues in the industry, optimize the efficiency of resource allocation, and enhance profitability.
Steady performance and sufficient orders. In the first half of 2022, the company achieved revenue of 6.263 billion yuan, net profit of 184 million yuan, an increase of 16.02% over the previous year, and net profit of 187 million yuan after deducting non-return mother's net profit of 187 million yuan, an increase of 20.67% over the previous year. By the end of June 2022, the company had on-hand engineering orders of 23.871 billion yuan, 2.07 times the revenue of the engineering business in 2021. Adequate orders guaranteed the steady release of future performance.
Benefiting from a high level of investment in water resources. The company achieved revenue of 8.496 billion yuan from its hydropower business in 2021, an increase of 29.58% over the previous year. China's water conservancy investment target is 1 trillion yuan in 2022, an increase of 32% over the previous year, and the company is expected to benefit significantly.
Maintain an “increase in holdings” rating. Excluding changes in the scope of merger, the estimated EPS from 2022 to 2024 will be 0.32/0.39/0.48 yuan, and the corresponding PE will be 24.28/20.22/16.53 times.
Risk warning: infrastructure investment falls short of expectations, repayment risk, company performance falls short of expectations
