A pioneer in China's new energy development, A+H shares are listed on both sides. The company is the first A+H listed new energy platform in China. In China's wind power development history, the company has largely played the role of a pathfinder. It landed on the Hong Kong Stock Exchange at the end of 2009, released an asset restructuring implementation report in early 2022, absorbed and merged ST Pingneng and landed on the Shanghai Stock Exchange, and achieved A+H listing. By the end of December 2023, the company's holding installed capacity reached 35.59 million kilowatts, including 27.75 million kilowatts of wind power, 5.96 million kilowatts of photovoltaics, and 1.875 million kilowatts of thermal power. The company's installed capacity expansion has been cautious in recent years. The total installed capacity of new energy sources was surpassed by Three Gorges Energy in 2023, and currently ranks second among listed companies.

The company plans to add 30 million kilowatts of new energy installed during the “14th Five-Year Plan” period (not including the Group's injection portion), and the Group promises to inject surviving wind power assets into the company within three years. In 2021, the company proposed adding 30 million kilowatts of new energy installed during the “14th Five-Year Plan” period, but due to the impact of the previous epidemic and the high price of photovoltaic modules, the company's progress in the development of new installed capacity is quite cautious. The National Energy Group signed an “Agreement to Avoid Competition in the Industry” with the company in early 2022, promising to effectively promote the injection of a total of 21.4067 million kilowatts of its other wind power assets into Longyuan Electric Power through asset injection, joint venture formation, and asset replacement. After the injection is completed in the future, the company's installed capacity will increase significantly compared to the current volume. The injection commitment actually confirmed the company's central position in the National Energy Group's new energy strategy.

We analyze accounts receivable as a core factor limiting the valuation expansion of Green Power Company (especially Hong Kong stocks), and look forward to improvements in repayment of stock subsidized projects. The company and the green power sector as a whole have not performed well since 2022. Delayed recovery of subsidy payments is still a major factor, especially in the Hong Kong stock market, which places more emphasis on cash flow. Affected by subsidy arrears, the company's current accounts receivable scale has grown rapidly in recent years (including receivables financing), reaching 35.7 billion yuan as of the end of December 2023. However, in comparison, the company's receivables recovery situation is better than that of its peers. Judging from the comparison between the company's net profit and the added value of accounts receivable over the years, the company basically had no money recovery problems before 2017, and the recovery situation improved dramatically in 2022.

The company's better subsidy recovery situation is related to the company's earlier projects. The share of the fleet in 2018-2020 was very limited. Judging from the new installed capacity of wind power over the years, the vast majority of the company's installed capacity was put into operation in 2017 and before, while the gap in China's renewable energy subsidy fund was small before 2017. In addition, the rush to install was not obvious at the time, the project was relatively standardized, and the “authorization” ratio for the company's projects was high. However, in 2018-2020, when the rush to install was most obvious, the company was affected by issues such as the Group's strategy, and the scale of new installations was small; the new projects added after 2021 were all affordable projects. It can be inferred from this that the proportion of “problem projects” in the company's existing projects is very limited, and the availability of a new round of subsidy funds is expected to be a catalyst for the launch of the company's stock price.

In addition to accounts receivable, we analyzed that another important factor limiting Green Power's stock price is market concerns about the yield of new projects. Behind this, the disadvantages of unstable new energy sources were revealed too soon, and the pressure on power system consumption exceeded expectations. Overall, however, we are analyzing the current point of analysis. There is a real downturn in the green power sector, but the response has been quite adequate. The benefits are gradually accumulating, and the logic of the industry's long slope and heavy snow has not changed. The biggest underpinning of the new energy industry is the hard restraint of the dual carbon strategy. Currently, the country's attitude is still firm, and long-term demand is worth looking forward to. We believe that with digestion over time, investment in green power will eventually return to rationality. Under multiple benefits such as rectifying chaos, rising demand, and lower prices upstream in the industrial chain, the return on the operating side is expected to be close to that of stable utilities throughout the entire industry chain. Relevant policy advantages are expected to be a catalyst for the company's trending market.

Profit forecast and valuation: Combined with the company's installation plan, we forecast net profit attributable to ordinary shareholders of the parent company in 2024-2026 (after deducting interest on perpetual bonds) of 67.30, 74.39, and 8.089 billion yuan, respectively. The current stock price corresponds to 8, 7, and 6 times PE. Compared with companies such as Three Gorges Energy, Jiazawa New Energy, Datang New Energy, and CGN New Energy, the company is a benchmark company in the green power sector. The stock price trend is closely related to the development of the entire industry. It was covered for the first time, giving it an “gain” rating.

Risk warning: the risk of electricity prices after the launch of the spot market; the abandonment rate exceeds expectations; the allocation of auxiliary services exceeds expectations.