2022/1Q23 Return to Mother's Net Profit +34%/+21% YoY, Lowered Profit Forecast and Target Price
Jidian Co., Ltd. announced results: revenue of 15 billion yuan (+13% after adjustment) in 2022, net profit of 670 million yuan (+34% after adjustment), in line with the performance forecast range (640 to 770 million yuan), 690 million yuan after deduction (+67% year-on-year); 1Q23 achieved revenue of 4 billion yuan (-6.2% year-on-year), net profit of 500 million yuan after deduction (+21% year-on-year), and profitability continued to improve. Regional differences in newly launched projects affect power generation efficiency and adjust the number of hours of wind power and photovoltaics utilization; increase the minority shareholders' equity ratio based on 2022 data; lower the earnings forecast for 23-24. The net profit forecast for 23-25 is estimated to be 11.8/15.6/1.86 billion yuan (previous value of 12.7/1,66/100 million yuan), BPS4.43/4.99/5.66 yuan (previous value of 4.52/5.11/-yuan). For reference, the average PB value for 23 is 1.5x (Wind's consistent forecast), giving the company 1.5xPB in '23, with a target price of 6.65 yuan (previous value of 8.12 yuan based on 2x22E PB), maintaining the “increase in holdings” rating.
New energy installed in 2022 was +27% compared to the same period last year, electricity capacity increased steadily, and profitability continued to improve
At the end of 2022, the company put into operation 9.06 million kilowatts of new energy and put in production 1.92 million kilowatts of new energy throughout the year (+27% increase). Thanks to the sharp increase in new energy installations: 1) the company's power generation capacity increased steadily, +14% compared to 2022; 2) the company's profitability continued to improve. 2022/1Q23's gross sales margin increased 2.6/4.2 pp year on year, and net sales margin increased 1.9/4.5 pp year on year. The company's target installation scale for 2025 exceeds 20 million kilowatts. There is still a gap of 7.64 million kilowatts compared to the end of 2022 (including thermal power). We expect the incremental installation to be mainly composed of new energy sources.
Comprehensive energy is developing steadily, and savings business is progressing normally
The company focuses on promoting integrated energy projects such as distributed energy, geothermal energy, biomass energy, etc., and demonstrates the application of hydrogen energy, energy storage and green transportation. As of March 2023, the company's Daan Fengguang green hydrogen production and ammonia synthesis integrated project has initially met the conditions for commencement. The company plans to invest in the project through a fixed increase of 2.28 billion yuan.
In May 2022, the company received Wang Qing's 5GW savings project. The first phase was 1.8 GW with a planned investment of 12.7 billion yuan; in October, the company's board of directors approved the establishment of Wang Qing Savings Company to determine the implementing entity for the subsequent development and construction of the project.
Expected to enjoy a valuation premium and maintain the rating for increasing holdings
Comparable to the company's average PB in '23 (Wind's consistent expectations), the company's current stock price corresponds to 1.2xPb in '22. The company's new energy installations continue to rise, and performance is expected to recover drastically. We expect the company's net profit CAGR to be 40% in 23-25. The company was given 1.5xPb for 23 years, with a target price of 6.65 yuan/share.
Risk warning: The increase in coal prices exceeded expectations, the number of hours used fell, and the progress of projects under construction fell short of expectations.