Deep ploughing Hubei, high-quality hydropower, new energy assets support the performance of the company. The company is positioned as a regional integrated energy company of the three Gorges Group in Hubei Province, with businesses including hydropower, thermal power, wind power, photovoltaic and coal and natural gas trade. In 2021, the installed capacity of hydropower, thermal power and new energy is 466,463,240 (wind power 84, photovoltaic 156) kilowatts respectively, and the contribution profit is about 15 million yuan,-5.3 billion yuan and 600 million yuan respectively. The hydropower and new energy businesses contribute about 90% of the company's net profit.
The influx of water has greatly increased, the price of thermal power has risen, and the profits of traditional energy may meet the growth. 2022Q1 the Qingjiang River Basin (Shuibuya) where Hubei Energy's main hydropower business is located is 50.1% more than the same period last year, which is 86.9% more than the annual average. hydropower generation reached 3.084 billion kilowatt hours in the first quarter, an increase of 2.83% over the same period last year. It is expected that with the arrival of summer, the incoming water and precipitation are expected to rise further, and the hydropower business is expected to achieve higher revenue and profits. The NDRC strongly guided the thermal coal market to return to reasonable prices, and at the same time continued to promote the reform of the coal-fired electricity price mechanism. The online electricity price of traded thermal power has risen by 20% compared with the benchmark price of coal-fired power in 2022, which is expected to turn coal-fired power into profits.
New energy installation is developing rapidly, contributing to the quadratic growth curve. In 2022, the company plans to increase the installed capacity of new energy by 2.08 million kilowatts, which is expected to increase by 85% compared with the same period last year. During the 14th five-year Plan period, the installed capacity of new energy (wind and photosynthesis) increased by 10 million kilowatts, with a compound growth rate of 54%, which is expected to lead to sustained growth.
Vigorously layout pumped storage, enter the energy storage advantage track. Under the new power system, pumped storage has the advantages of low cost, high stability and large scale, so it will become the most important auxiliary service. Article 633 two-part electricity price and independent marketization will greatly improve the pumping profitability. Hubei is rich in pumped storage resources. in the medium-and long-term Development Plan of pumped Storage (2021-2035), the total installed capacity of the project in Hubei Province has reached 3900 kilowatts. In the 14th five-year Plan for Energy Development in Hubei Province, among the 11 key construction projects of large-scale pumped storage, Hubei Energy has as many as 6 project resources and an installed capacity of 7.4 million kilowatts. Listed companies are second only to Wenshan Electric Power (after asset replacement) and three Gorges Energy.
Risk hint
Coal prices have risen sharply, new energy installation is not as expected, water supply is poor, macro policy changes, and so on.
Coverage for the first time, giving a "buy" rating
We estimate that the company's 22-24 revenue will be 257 plus 32.8 billion yuan respectively, and the net profit attributable to the parent company will be 2.98 billion yuan, with an annual profit growth rate of 23%, 24% and 19%, and earnings per share of 0.44, 0.54 and 0.65 respectively. Through multi-angle valuation, it is concluded that the reasonable valuation range of the company is between 6.56 and 6.79 yuan, which is 45% more than the current stock price of the company. We believe that the company is expected to see substantial growth in performance driven by water growth and a reversal in coal profits in 2022, while vigorously allocating new energy and pumped storage, covering it for the first time and giving it a "buy" rating.