Zijin joined, “new energy+environmental protection” two-wheel drive development. The company is a leading enterprise in the domestic environmental protection industry. The controlling shareholder change was completed in May 2023, and Zijin Mining became the company's largest shareholder. In the future, it will develop new energy industry business on the basis of consolidating environmental protection business. In October 2022, the company announced a 5GWh lithium iron phosphate energy storage battery construction project; in the same month, it announced the acquisition of shares in a new energy business subsidiary owned by Zijin Mining, the controlling shareholder Zijin Mining; in December 2022, the company announced the establishment of a joint venture with Honeycomb Energy to build a new energy sodium battery module pack and system integration project. The first phase plans a 2GWh energy storage battery pack, and the second phase plans a 3GWh energy storage battery pack; in addition, the company will operate as a green power operator in Zijin Mining. With the sharp drop in lithium carbonate and polycrystalline silicon prices, the current integrated photoelectric storage project has already been installed It is quite attractive for investment, and there is plenty of room for future expansion.
The company is expected to become Zijin's green power+energy storage and new energy industry platform to achieve the development of “new energy+environmental protection” two-wheel drive.
Energy storage is underpinned by a decline on the cost side, and the profit potential of photovoltaic integrated storage power plants is already significantly attractive. Global demand for energy storage batteries is expected to grow from 236.7 GWh to 804.4 GWh in 2022-2025, with a CAGR of 50.3%. Allocation and storage can effectively improve the power generation utilization rate and internal rate of return of photovoltaic power plants. According to estimates, when the power generation utilization rate of photovoltaic power plants is less than 95%, increasing the allocation and storage ratio can effectively increase the internal yield of the power plant. At the same time, increasing the allocation and storage ratio is conducive to increasing the power generation utilization rate of photovoltaic power storage plants and effectively supporting the profit space of power plants. On the other hand, with the sharp drop in prices of lithium carbonate and polycrystalline silicon, the cost-side pressure on photovoltaic modules and lithium battery energy storage cells, product prices have dropped significantly. According to estimates, the power generation utilization rate of photovoltaic power storage plants used in mines has reached about 90% to 95%. According to different allocation and storage ratios, the internal rate of return of the project has reached 11.11% to 14.06%. As an “new infrastructure” project with heavy assets and light operation, we believe that this internal rate of return is already quite attractive.
Cooperating with Zijin to lay out the entire green power+energy storage industry chain, the new energy industry platform is rising. Zijin Mining has clarified the path to achieve carbon neutrality, and clean energy replacement is an important part of the plan. According to Zijin Mining's announcement, it is expected that the carbon peak will be reached in 2029, and the company's overall clean energy usage ratio will reach 30% by 2030. According to estimates, the Zijin Mining industry is expected to have an installed capacity of about 2.2 GW of new energy by 2030, and the value of the integrated solar storage project in terms of additional installed capacity is 2.57 billion yuan. The company's new energy business, from core mineral resources to the terminal market, is expected to be deeply tied to the Zijin mining industry chain and grow into a large-scale new energy industry platform.
The new energy business injected growth momentum, and for the first time, coverage was given a purchase rating. The company relies on Zijin Mining. The core raw materials for energy storage batteries such as lithium carbonate on the cost side of the new energy business have resource guarantees and cost advantages. Downstream energy storage batteries and green power projects have a synergistic effect with Zijin Mining's carbon neutrality plan. It is expected to grow into a green power+energy storage new energy industry platform in the future; the environmental protection business is expected to maintain an advantageous position in the industry and maintain steady growth. The company is currently constructing 2 energy storage projects and 4 green power projects. The company's performance growth momentum is sufficient. It is expected that the company will achieve net profit of 11.2/14.4/1.89 billion yuan in 2023-2025. Using 2024 as a comparable year, the company's 2024 division valuation is reasonably estimated at 22.45 billion yuan, corresponding to the current market value, with room for a 40.6% increase in market value, covering purchase ratings for the first time.
Risk warning: Zijin mining's carbon neutrality process falls short of expectations, competition in the energy storage and green power industries is intensifying, and traditional environmental protection business orders fall short of expectations