Poor operating data from January to May 2023, performance or short-term pressure:
The profit attributable to 2023Q1's shareholders was approximately RMB 840 million, a year-on-year decrease of 10.41%; the decline in profit was mainly due to a decline in natural gas sales. The heating period in Hebei Province, the main operating area of 2023Q1 company, decreased year-on-year. At the same time, heating demand declined due to the rise in overall temperature in the first quarter. However, in January-May, the company sold 1,849 million cubic meters of gas, a year-on-year decrease of 6.51%; 1-5 completed a total of 68629 million megawatt-hours of electricity, an increase of 1.93% over the previous year. Overall, the company's operating data for the new energy and natural gas sector in the first 5 months was poor. It is expected that the company's overall gas volume will increase by about 2%-5% in 2023, compounded by a decline in gross margin, which will put pressure on performance growth in 2023.
350-500MW of wind power will be installed in 2023, and the new installed capacity will accelerate next year:
Affected by the delay in issuing Hebei Province's approved targets in 2022, according to the company's current projects under construction, it is initially anticipated that 350-500MW will be added in 2023, mainly wind power projects in Hebei Province. To achieve the company's target of 10GW of installed capacity by the end of the 14th Five-Year Plan, the approved targets extended in 2022 will be recorded in the 2024 and 2025 commissioning plans. Based on the calculation of an average annual installed capacity of 1.5 GW over the next two years, it is initially determined that the installed capacity in 2024 will be around 1-1.5 GW.
The first phase of the Tangshan LNG project is about to be put into operation:
The first batch of Tangshan LNG will arrive at the pier in June, so starting in June, the first phase of the LNG project will enter the commissioning period. Provisional gasification fees and piping fees have been approved previously, and will be adjusted later according to the customer's turnover and the amount of gas transported by the pipeline. Relevant depreciation and financial expenses are only calculated after the commissioning period is transferred to the commercial service. Based on the turnover and fixed cost estimates of the LNG terminal phase I project in the second half of the year, it is expected that break-even will be achieved in 2023.
Give the buy rating and update the target price of HK$3.96:
Combined with industry valuations, we updated the company's target price to HK$3.96, which is equivalent to 6 times and 4.7 times PE in 2023 and 2024. The target price has room for a 37% increase from the current price, giving a buying rating.