Description of the event
The company issued the “Notice on the Action Plan for Double Improvement of Quality and Return”, which proposed that from January to June 2023, the company signed a new development agreement of 29.34 gigawatts, an increase of 77.94% over the same period last year; a total development target of 4.01 gigawatts was achieved. Furthermore, the announcement made it clear that the company will deliver high quality corporate value information and implement a “long-term, stable, and sustainable” shareholder value return mechanism, etc.
Incident comments
Electricity capacity and installed capacity have increased steadily, and we are optimistic about the company's long-term steady performance. Since the “14th Five-Year Plan”, the company has responded positively to the national “carbon peak, carbon neutrality” policy, increased investment and development of new energy projects, and accelerated high-quality development in accordance with the development idea of “troika, dual core concurrent, and four-wheel drive”. In 2023, the company completed 76.226 billion kilowatt-hours of power generation, an increase of 7.92% over the previous year; by the end of the third quarter of 2023, the holding installed capacity reached 32.8095 million kilowatts, an increase of 1.7017 million kilowatts over the end of 2022. In addition, the company also achieved rapid growth in the acquisition of resources for new projects. From January to June 2023, the company signed a new development agreement of 29.34 gigawatts, an increase of 77.94% over the same period last year; a cumulative development target of 4.01 gigawatts was achieved. Considering the company's sufficient project reserves, as well as the continued decline in the price of photovoltaic modules and the continuous progress of the renovation of old wind farms, we are optimistic about the long-term steady growth of the company's new energy installed equipment construction and operating profits.
The new green power policy includes clean energy, and demand stimulates the opening of reforms. Recently, the National Development and Reform Commission and three other ministries and commissions jointly issued the “Notice on Strengthening the Link between Green Electricity Certificates and Energy Saving and Carbon Reduction Policies to Vigorously Promote Non-Fossil Energy Consumption”. On January 5, 2024, the 23rd Executive Meeting of the State Council passed the “Interim Regulations on the Administration of Carbon Emissions Trading”. Since 2022, the overall performance of the new energy generation sector has been weak. The core reason is weak electricity price expectations brought about by the promotion of marketization. At the policy level, in order to guarantee the stability of green electricity prices and the profits of project developers, a pilot green power transaction was launched in 2021, but in 2023, the total scale of green power transactions in China was 53.77 billion kilowatt-hours, but it only accounted for 3.66% of the country's new energy generation. The reason for this is that the current demand side of the green power trading market is more voluntary, and the relevant players are not very willing to participate. The recent release of two documents shows that policy formulation is shifting from improving the supply side and trading system in the past to reforms on the demand side of green power and green license transactions. Concerns about green electricity prices are expected to gradually clear up as the reform progresses. We are still optimistic about the long-term investment value of the green power industry.
Acting proactively, demonstrating leading responsibility. As early as November 2023, the company announced plans to repurchase H shares; in this company announcement, it was once again mentioned that it attaches great importance to investor relationship management, establishes a multi-level healthy interaction mechanism, conveys company value information with high quality, and implements a “long-term, stable, and sustainable” shareholder value return mechanism. The State Assets Administration Commission recently stated that it will further study and include market value management in the performance assessment of central enterprise leaders. The action plan announced by the company is also a timely response to the relevant requirements of the State Assets Administration Commission. Against the backdrop of overall pressure on the industry, the company acted proactively, reflecting its responsibility as a leading company in the new energy power generation operation industry.
According to the company's latest operating data, adjusted to the company's profit forecast, the 2023-2025 EPS is expected to be 0.90, 1.06, and 1.20 yuan, respectively, and the corresponding PE is 20.37 times, 17.34 times, and 15.29 times, respectively, maintaining the company's “buy” rating.
Risk warning
1. The risk that the progress and benefits of the commissioning of new construction projects fall short of expectations;
2. Wind conditions and lighting resources fall short of expected risks.