Net profit returned to the mother in 2022 was +7% compared to the same period last year, and profit forecasts and target prices were lowered
Zhongmin Energy released results: revenue of 1.79 billion yuan (+15% after adjustment) in 2022, net profit of 730 million yuan (+7% after adjustment), lower than Huatai's forecast (8.3 billion yuan), mainly due to loss of 46 million yuan from the Heilongjiang biomass project; the company paid dividends for the first time since the restructuring and listing, with a dividend rate of 26%.
We expect EPS of 0.44/0.47/0.50 yuan for 23-25 years (previous value 0.49/0.52/-yuan). The two major high-quality assets of the majority shareholders (Pinghai Bay Offshore Wind Power Phase III and Yongtai Savings) are expected to be injected one after another to drive the company's medium- to long-term performance growth. Comparatively, the average PE value in '23 was 14x (Wind's unanimous forecast), giving the company 14xPE in '23, with a target price of 6.16 yuan (previous value of 7.84 yuan based on 16xPE in '23). Following the second batch of offshore wind power contests in Fujian Province, we are optimistic about the company's location advantage. Maintain the buy rating.
The grid-connected power generation project is running steadily, and there is no change in internal equipment in the short term
By the end of 2022, the company had a total of 957,300 kilowatts connected to the grid, with no change over the previous year; of these, 611,300 kilowatts of onshore wind power and 296,000 kilowatts of offshore wind power. The net profit of Fujian offshore wind power in 2022 was +17% year on year, the net profit of Fujian onshore wind power was +2% year on year, and the net profit of Heilongjiang wind power was +239% year on year. The size of the wind is the core variable that affects the company's performance. The company's onshore and offshore wind power utilization hours in Fujian in 2022 were 3,328/4,038 hours respectively (+298/-186 hours), all better than the Fujian provincial wind power average (3,132 hours); the company's wind power utilization hours in Heilongjiang were 2,518 hours (+233 hours year on year), slightly lower than the wind power average in Heilongjiang Province (2,559 hours).
Pinghaiwan Phase III has already met the injection conditions. The majority shareholder of Yongtai Savings, Fujian Investment Group, promised during the major asset restructuring of Zhongmin Energy in 2019 that the prerequisites for the group's related assets to start asset injection include: 1) stable commissioning; 2) achieving profit within a full fiscal year; 3) there are no compliance issues. The Group's Pinghai Bay Offshore Wind Power Phase III project was put into operation at the end of the year 21, and the above prerequisites have been met. The Group's Yongtai Savings Project is equipped with 4 units totaling 1.2 GW. It was put into operation at full capacity on March 28. The production schedule is in line with our expectations (first half of 2023).
Following the second batch of offshore wind power contests in Fujian, the company's location advantage is still in Fujian's “14th Five-Year Plan” plan to add 4.1 GW of offshore wind power to the grid and develop 10.3 GW. As a result of the first batch of contests in July '22, electricity prices were lower, triggering market concerns about the yield of new offshore wind power projects. The second round of competition is imminent. Considering the objective needs of industrial development (project yield should not be lower than financing costs), we expect to reverse the market's overly pessimistic view on the development of offshore wind power in Fujian Province. The investment group, the majority shareholder of the company, undertakes important responsibility for livelihood projects and infrastructure construction in Fujian Province, which is expected to provide the company with a location advantage in subsequent new projects.
Risk warning: construction of new projects is lagging behind; subsidy verification results are lower than expected; new project acquisition falls short of expectations.