The company strives to enter the power exchange track and strive to become a leading mobile digital energy technology operator. In the past five years, the sales of new energy vehicles in China has increased at a high speed of 55.01% CAGR, but there is still a big gap in the energy supplement of new energy vehicles in our country, and the ratio of bus to pile is as high as 7.2915. In view of the fact that power exchange has the advantage of short energy replenishment time to alleviate energy supply anxiety, and there is a broad demand for power exchange in the future, the number of power stations in China is expected to exceed 30, 000 by 2025, and the scale of the operating market is expected to exceed 60 billion yuan. At present, Xiexin has actively launched the power exchange business, and has achieved some unique advantages: the company's cars, batteries, port scene matching, covering the full business scope of heavy trucks, light trucks and passenger cars, and has formed a technical system supported by Hub.OS, Hub.E and S-BMS. The company is good at using capital operation, through cooperation with CICC Capital to set up a carbon neutralization fund, and to complete the first fixed increase of 3.76 billion yuan in 2022 to help the expansion of mobile energy business; the company relies on Xiexin Group to achieve low-cost green power supply through the operation of the whole industrial chain of source, network, lotus and storage; in addition, the company also actively binds multi-resources to build a mobile energy ecosystem. All these provide a strong guarantee for the company to generate power and change electricity.

Clean energy accounts for more than 90% of China's leading private clean energy suppliers. According to the data of the China Daily in 2023, the company has a total installed capacity of 2.9003 million kilowatts. Except for 266000 kilowatts of coal-fired cogeneration, the rest are clean energy. Clean energy accounts for 91% of the installed capacity, and new energy composed of Fengguang accounts for 25.62% of the installed capacity. Electric power sales and steam sales are the moat of the company's performance, accounting for 91.8% of the operating income in 2022. Cogeneration is concentrated in economically developed and resource-rich areas, with regional exclusive advantages, and the electricity generated is the first category of national priority guarantee acquisition. Profitability is guaranteed. 2023H1's comprehensive gross profit margin rebounded to 17.8%, and the company's comprehensive gross profit margin is expected to continue to rise due to factors such as lower upstream fuel costs and higher electricity prices due to tight balance.

Closely follow the wave of power reform, the layout of electricity sales, distribution, demand-side management, energy storage, carbon assets trading and so on.

In terms of electricity sales, in 2022, the company sold 198.3 billion kWh of electricity for market-oriented trading services, an increase of 14.89 percent over the same period last year, and successfully expanded the electricity sales markets of Zhejiang and Sichuan. The two markets added more than 1 billion kWh of new trading capacity and served more than 1 billion customers. In terms of distribution business, in 2022, the company's distribution project cumulative management capacity 2111MVA, an increase of 93.49% over the same period last year, a new Inner Mongolia regional distribution management capacity 1020MW, with four national distribution network pilot projects. In terms of demand-side management, the company has the first-class qualification of national "demand-side management service organization". As of 2023H1, the user-side management capacity of the company exceeded 1400 million KVA. In 2022, the demand-side response load of Jiangsu Province exceeded 2000MW, and the business scope expanded steadily. In terms of energy storage, accumulative management of 14MWh user-side energy storage projects is expected to cooperate with lithium power business. In terms of carbon asset trading, the company established Jiangsu Xiexin carbon Asset Service Co., Ltd., which is responsible for participating in green power, green card, carbon asset management and trading. As of 2023Q1, Xiexin carbon Asset Company has cumulatively completed green electricity trading volume of about 100 million kilowatt-hours and green card trading volume of about 150 million kilowatt-hours.

The company plans to build an energy computing center and enter the new track of digital energy computing integration. Computing power has become the focus of the strategic layout of science and technology in various countries, while China has initially established a computing industry ecology of continuous improvement of industrial chain, rapid growth of market scale, continuous enhancement of international competitiveness, increasing number of participants and highly active innovation factors. It is estimated that the scale of China's core computing industry will exceed 4.4 trillion yuan by 2025. Noting the huge prospect of computing market and the company's inherent advantages, the company successively opened the beginning of AI computing field by increasing investment in Xinglin Technology in 2023, signing cooperation with Suzhou government to build an energy computing center in Suzhou, and commissioning Kyushu Cloud, a leading edge computing company, to build and operate the energy computing center in Suzhou. In the future, the company also plans to invest 5 billion yuan to build 15 energy computing centers worldwide, and the company's digital energy business is expected.

Investment suggestion: the company is the leader of clean energy operation in China, backed by Xiexin Group, with good industrial coordination resources. Aim at the vast market of mobile energy and try our best to enter the charging and changing business. At the same time, the company will take a number of actions in 2023 to transform into the AI computing market and enter the new track of digital energy computing integration, committed to building the company into the world's leading mobile digital energy technology operator. It is estimated that the company's operating income from 2023 to 2025 will be 12.099 billion yuan, 14.512 billion yuan and 16.88 billion yuan respectively, an increase of 13.3%, 19.9% and 16.3% respectively over the same period last year; and the net profit of 1.257 billion yuan, 1.693 billion yuan and 2.088 billion yuan, up 84.8%, 34.8% and 23.3% respectively over the same period last year. The corresponding EPS is 0.77,1.04,1.29 yuan, and the corresponding PE is 15.7,11.6,9.4 times.

Risk tips: macroeconomic downside risks; lower-than-expected risks of switching vehicles; mobile energy business expansion does not meet expectations; fuel prices continue to rise leading to gross profit margin decline risk; clean energy project construction schedule is not as expected risk; government approval risk.