Jointly built by Sankao and Beijing Holdings, the leading comprehensive new energy service provider in China. The company is a clean energy platform jointly created by Shankao Holdings, Beijing Water and CITIC Industrial Fund. It has developed rapidly since 2015, with wind resource development and clean heating business as its main business, and continues to explore new energy businesses such as multi-energy complementarity, hydropower, energy storage, hydrogen production, electricity distribution and sales, and power exchange, with the aim of becoming a leading comprehensive new energy service provider in China. At the same time, the company owns 22.88% of Shankao Huanneng's shares, processes a total of about 4,030 tons of food and food waste every day, and exports about 150,000 tons of industrial-grade mixed oil per year.
The profitability of 2023H1 has improved markedly, and wind power has achieved rapid development. 2023H1 achieved operating income of HK$2,769 million, or -5.75%; realized net profit of HK$360 million, or -0.38%, year-on-year; and achieved gross margine/net interest rate of 53.77%/12.83%, respectively, +7.17 pct/+1.17 pct.
The company's profitability has improved markedly, mainly due to the optimization of the business structure, and the share of revenue from the wind power business, which has a high gross margin, has increased. 2023H1's photovoltaic power generation/wind power/contract operation/construction and related services/clean heating achieved revenue of HK$15.98/6.54/0.73/0.61/382 million, respectively, +1.61%/+28.89%/+17.44%/-58.37%/-41.11%, respectively. The gross margin was 63.0%/58.3%/51.7%/5.5%/15.4%, respectively.
The scale of the landscape business will be expanded in an orderly manner, and it is expected that 450 MW will be connected to the grid within the year. By the end of June 2023, the number of centralized photovoltaic power plants owned by the company was 52, with a grid-connected capacity of 2362 MW (YOY+56MW), an average of 627 hours of use (YOY-24 hours), and a power generation capacity of 14.915 billion kilowatt-hours (YOY +1.57%); the total installed capacity of distributed photovoltaic power plants managed or operated was about 800 MW; it owned and operated a total of 16 wind power plants, with a total grid-connected capacity of 790 MW (YOY+202MW), with an average usage time of 1490 hours (YOY+ 202MW) 128 hours), with a power generation capacity of 11.513 billion kilowatt-hours (YOY +46.67%); at the same time, the total scale of Internet projects that can be connected to the grid, is under construction, or has been approved to be built exceeds 720 MW, of which about 450 MW is expected to be connected to the network within the year.
Sankao Group is empowered to lead the high-quality development of landscape projects. In 2022, Shandong Expressway Group became the controlling shareholder of the company, empowering the company with strong resources, mainly reflected in: 1) Using Shankao Group's existing territorial resources to develop distributed photovoltaics and decentralized wind power. On October 13, 2023, the company announced that Shandong Expressway Linteng and Shandong Expressway Guilu signed a cooperation agreement with the company on leasing designated areas and plan to invest in the construction of photovoltaic power plants in areas such as toll gates, service areas, and slopes; 2) Shareholder background forms a strong endorsement for the company. Under the coordination of Shankao Group, the company bid on August 31 and September 28, respectively Shandong Heze 380MW wind power project and Jiangsu 800MW wind power project.
Profit Forecast: Covered for the first time, giving a “increase in holdings” rating. We expect the company to achieve revenue of HK$53.78/60.54/HK$6.712 billion from 2023-2025, and net profit to parent of HK$276/320/375 million. The corresponding PE is 22.03 x/19.02x/16.24x, respectively.
Risk warning: Changes in the macroeconomic situation at home and abroad have exceeded expectations, delinquent payments have fallen short of expectations, electricity sales prices have continued to fall, project progress has fallen short of expectations, and profit forecasts and valuation models have fallen short of expectations