Incident: On March 11, the company issued an announcement. The company's new energy project was approved by Weifang City, involving a 200MW decentralized wind power project, with a total investment of 1.5 billion yuan, resulting in an annual power generation capacity of 50.1 million kilowatt-hours to achieve “spontaneous private use, surplus electricity online” for wind power generation.
Comment:
1) Large electricity users, high costs, and the scarcity of “spontaneous use, Internet of surplus electricity” wind power projects is prominent. ① In recent years, the company's electricity consumption has increased year by year. According to its “14th Five-Year Plan” development plan, the company's target production capacity will reach 1 million tons in 2025, and the company's annual electricity consumption will exceed 1 billion kilowatts. The construction and commissioning of wind power projects will bring huge space to the company to reduce costs. ② This wind power “spontaneous use, surplus electricity online” project is a decentralized wind power project that the company applied for construction from the government to make full use of the rich wind power resources surrounding the Zhucheng factory area. Its volume is 200MW, which is very scarce among private enterprises in Shandong Province.
2) Increase the proportion of green electricity and respond positively to the “carbon border adjustment mechanism”. The company currently accounts for about 25% of overseas market revenue. According to the plan, the share of overseas revenue will increase to more than 40% in the next 3 to 5 years, and increasingly strict carbon tracking requirements will challenge the export of Daye shares. The EU's Carbon Border Regulation Mechanism (CBAM) will be officially implemented in 2026, requiring importers of products including steel and aluminum to collect carbon emission data and report their carbon emissions to the EU authorities before continuing to export to Europe. After the completion of the approved project, the company will further strengthen its competitiveness in overseas markets with self-built green energy such as photovoltaics and wind power.
3) Electricity costs have been drastically reduced, and profit elasticity has increased sharply
The company's wind power projects include 200MW distributed wind turbines and supporting energy storage and substations, etc., with a total investment of 1.5 billion yuan, resulting in an annual power generation capacity of 50.1 million kilowatt-hours. The company's electricity costs in recent years are about 0.72 yuan/kilowatt. According to our estimates, after the completion of the wind power project, the comprehensive cost of wind power generation can be reduced to 0.267 yuan/kilowatt hour, corresponding to an increase of 227 million yuan in the company's profit. Considering a profit increase of 227 million yuan from wind power operating projects, a separate valuation can be given 15 times, corresponding to an increase in the company's market value of 3.4 billion yuan.
Maintaining a “buy” rating: According to the business split and profit forecasting models, we expect the company's operating income to be 60.70/66.44/7.139 billion yuan in 2023-2025, and net profit to mother (without considering the increase in profits brought about by wind power projects) of $1.13/1.93/354 million, respectively. The PE corresponding to the current stock price is 30.6/17.9/9.7 times, respectively, to maintain the “buy” rating.
Risk warning: the risk that demand in the downstream industry falls short of expectations; the risk of electricity restrictions and production restrictions; the risk of not updating the information used in the research report in a timely manner, etc.