Core ideas:
State Power Investment's important power platform, equity incentive to accelerate the installation of clean energy. The company belongs to the State Power Investment, the business is based on Shanghai Jiangsu radiation the whole country, and vigorously develop green power, 2022Q3 holding installed 19.98GW, of which coal / gas / wind / light respectively is 9.19/2.87/3.88/4.04GW, clean energy accounts for 54%. Equity incentive landed in June 2022 to assess the proportion of ROE and clean energy installation. The company's thermal power business suffered a substantial loss affected by the rise in coal prices, driving the company's 2021 full-year net profit and the first three quarters of 2022 net profit of-18.9 yuan and 220 million yuan respectively.
Imported coal prices are expected to decline, thermal power installed at home and abroad have room for growth. The company has a high proportion of coal outsourcing (65% of imported coal in Shanghai in 2021). In 2022, it plans to purchase 19.5 million tons of coal, of which imported coal is 5 million tons (25.6%). The high outsourcing ratio makes the unit price of 2022H1 coal reach 1410 yuan / ton (+ 48.7% compared with the same period last year). As a result, the profit of thermal power has declined more than that of the same industry. We have recently observed a decline in imported coal prices, and it is expected that the company's coal and power performance will continue to improve with the increase in the share of the Association and the return of coal prices to a reasonable level. The company promotes the expansion of Waigaoqiao, coal power and other projects in Turkey, and actively develops the layout of Hungary and other places, and there is still room for growth.
The proportion of new energy installed has reached 40%, and wind / light 3.45/8.15GW is expected to be added in the 14th five-year Plan.
In terms of wind power, the company is based in Jiangsu, Zhejiang and Shanghai, with high-quality sea breeze resources. As of 2022H1, land breeze / sea breeze is installed as 1.6/2.2GW, among which Haifeng enjoys high electricity price with subsidies. In terms of photovoltaics, the installation slowed down during the year due to the high price of silicon, but the company plans to add new 8.15GW in the 14th five-year Plan, considering that the price of silicon has dropped somewhat, and the installation may be accelerated next year. In addition, the company actively develops the business of hydrogen energy (Shanghai hydrogen filling station) and energy storage (energy storage for large industrial users in Jiangsu and other places); at the end of December, the company completed the acquisition of Hungary's Tokaj photovoltaic project with 245 million yuan, speeding up the process of internationalization.
Profit forecast and investment advice. It is estimated that the net return profit of the company in 2022-2024 will be 7.03-17.32-billion yuan respectively, and the PE corresponding to the latest closing price will be 40.08-16.28 million 13.99 times respectively. The company promotes clean energy transformation, new energy planning is strong, thermal power performance is expected to hit bottom and pick up. With reference to the inter-industry valuation, the company is given a valuation of 18 times PE in 2023, with a "buy" rating for the first time corresponding to the reasonable value of 11.07 yuan per share.
Risk hint. Coal prices continue to rise, project construction schedule, electricity demand and other risks are lower than expected.