Core ideas:
Electricity generation increased significantly in 18 years, and was slightly lower than expected in the fourth quarter.
Datang New Energy achieved 5059GWh in the fourth quarter of 2018, an increase of 3.35% over the same period last year, of which wind power generation 4994GWh was 3.4% higher than the same period last year. Cumulative power generation 17975GWh was achieved in 2018, an increase of 17.49 percent over the same period last year, of which wind power generation 17686GWh increased by 17.63 percent over the same period last year. Electricity generation in the fourth quarter was slightly lower than expected.
We estimate that the number of hours of wind power utilization in 18 years can reach 2050 hours, an increase of about 168hours compared with the same period last year, and the abandonment rate is less than 9% for the whole year, an improvement of nearly 8 percentage points over the same period last year.
Downgrade the new installed capacity of 18AB in 1919
Due to the stringent requirements of environmental protection and land expropriation, the construction cycle of the wind plant has been lengthened, and we have appropriately reduced the company's 19-year new installation scale to 400/550MW (previously 500/600MW).
The abandonment rate in 1919 will continue to improve, and there is still room for growth in stock benefits.
Due to the large scale of wind power installed in the company's stock (9GW at the end of 18), the new part has relatively little impact on the overall impact, and the company's performance is more sensitive to the increase in the number of hours in which the stock is installed. We conducted a sensitivity analysis of Datang New Energy's EPS relative wind power utilization hours and new wind power installation in 2019: wind power utilization hours increased or decreased by 25 hours, net profit changed by 5-6% in the same direction; new installed 50MW increased or decreased, net profit change was less than 1%. We believe that the abandonment rate in 1919 will be further improved, and there is still much room for growth in the company's installed capacity.
The subsidy should be recovered as a whole.
At present, the proportion of the company's transportation projects covered by the first seven batches of catalogs is about 75%, and the amount of recoverable receivables is expected to be 15-2 billion for the whole of 18 years. We believe that with the imminent parity of wind power and the slowdown in the growth of wind power and photovoltaic installations, the future subsidies and related policies will be more optimistic.
Profit forecast and investment rating
On January 15, 2019, Datang New Energy (01798.HK) closed at HK $0.91. We forecast that the EPS from 2018 to 2020 will be RMB 0.171, 0.215, 0.240, respectively, and the price-to-earnings ratio of the corresponding share price will be 4.6, 3.6, 3.3. We maintain our "buy" rating based on a fair value of HK $1.37 based on a price-to-earnings ratio of 5.5 times 2019.
Risk hint
The abandonment rate rebounded; the incoming wind situation did not meet expectations; the new installation did not meet expectations; and the risk of policy uncertainty such as subsidies and green cards.