Matters:
The company released its 2022 annual report on March 23. The company achieved revenue of 18.561 billion yuan in '22, +15.0% over the previous year (after restatement), and the net profit of the mother was 2,294 billion yuan, a slight decrease of 0.04% over the previous year.
Commentary:
The main business is operating steadily, and revenue is growing steadily. The company achieved revenue of 18.561 billion yuan in '22, of which the natural gas/landscape business revenue was 118.51/6.295 billion yuan respectively, +24.5%/-0.1% year on year. The company's gas loading/sales volume was basically the same in '22, and the volume of gas transfer on behalf of the company increased rapidly. The total gas transmission/sales/transfer volume of the natural gas business for the year was 45001/38.85/616 million cubic meters, +8.27%/2.01%/76.6%; of the gas sales volume, the wholesale/retail/CNG/LNG business was 19.57/18.38/0.84/0.05 billion cubic meters respectively, -5.9%/+12.6%/+1.6%/-62.3% year on year.
The CNG and LNG business are operating steadily, and the Tangshan LNG project is progressing steadily. 1) By the end of the year, the company operated a total of 6/3 CNG parent/child stations, 3 LNG filling stations, 2 L-CNG joint stations, and the first phase of the Tangshan LNG project was basically completed. 2) The bidding for the Beijing-Han Line gas pipeline (Luancheng section) relocation project, the Cangzhou Southeast Natural Gas (Eancang gas source) utilization project, and the Luquan-well limited gas pipeline project were completed. The Baoding Qingyuan-Cangzhou Suning Pipeline Project and the Qinxi Industrial Park Branch Project of the Qinfeng Pipeline are being approved. With the commissioning of new projects and the expansion of transportation channels, it is expected that the scale of business will continue to rise in the future.
Wind power installations grew steadily year over year, and business continued to improve. 1) In terms of installation: The company added 138/171MW of wind power holding/equity installed capacity in '22, with a cumulative holding/equity installed capacity of 5811.85/5482.49MW. The company's PV installed capacity grew less in fiscal year 22, adding 320.08 MW of registered capacity, and a cumulative total of 607.2 MW of registered unstarted projects. The average number of hours wind/light used throughout the year was 2485/1404 hours, which is basically the same as the previous year, and higher than 264/67 hours nationwide. 2) In terms of power generation and electricity prices, wind power/photovoltaic power generation in '22 was 140.31/167 million kilowatt-hours, which is basically the same as the previous year. The connection of affordable projects to the grid is a drag on the company's overall electricity price level. According to estimates, the company's average feed-in tariff in 2022 was 0.454 yuan/kilowatt-hour, -3% year on year.
Actively deploying savings and energy storage businesses is expected to open up a second growth curve in the future. During the reporting period, the group added 6.4 GW of pumped storage agreement capacity. Of these, 4 projects were included as key early projects in the “14th Five-Year Plan” of Hebei Province. A total of 7 units have been put into operation in the Hebei Fengning 3.6GW pumped storage power plant project, which the company has invested in. Furthermore, the paddock flywheel energy storage demonstration project and the well limited flywheel energy storage demonstration project developed by the company have been included in the list of independent energy storage demonstration projects on the Hebei power grid side. The two projects are located in the Hebei North Power Grid and Hebei South Grid regions respectively. In the future, the company will try to carry out energy storage projects outside the province, which may open up a second growth curve.
Investment advice: Considering the slowdown in the company's new energy installation progress in '22, we lowered the company's 23/24 profit forecast and added a 25-year profit forecast. We expect to achieve net profit of 26.33/38 billion yuan in 23-25 (the previous forecast for 23/24 was 30/3.6 billion yuan), corresponding to a growth rate of +12%/+27%/+15%. Due to the strong growth of the company's subsequent gas business, Hebei's wind resources are better and the project quality is higher. Combined with comparable companies, the company's gas and green power sector was given 20x PE, corresponding to the company's market capitalization of 51 billion yuan in '23. There is room for 28% increase from the current market capitalization of 39.8 billion yuan. The target price was lowered to 12.19 yuan, maintaining the “recommended” rating.
Risk warning: Other risks such as LNG project construction falling short of expectations, the risk of increased competition in the new energy operating market, the risk of performance fluctuations due to wind winds, and rising gas prices due to the impact of the international situation.