Zh Tong Finance App learned that Anxin International released a research report stating that JNCEC (00579) announced at the beginning of the year that the Beijing Development and Reform Commission will lower the on-grid electricity price of the company's gas power plants. The expected impact on the profitability of the gas power generation sector is 600-700 million yuan. The company will strive to achieve the target of pre-tax profit not less than 4.1 billion yuan in 2024. The bank expects the company's net profit in 2024 to be more than 3 billion yuan, corresponding to a forecast PE of 5.2 times in the industry, which is relatively low, and a dividend yield of 7.2%, which is the highest in the industry. The bank believes that the company's renewable energy division is developing rapidly, with strong operating cash flow, high dividend yield, and room for stock price improvement. It is recommended that investors layout on dips.

Anxin International's main points are as follows:

JNCEC is the largest gas power company in Beijing.

The gas power generation and heating division is a business division developed by the company earlier, which contributed 61% of the company's revenue and 36% of the company's operating profit in 2023. The company is the largest gas power company in Beijing, and its gas and thermal power business is mainly located in Beijing. There are currently 8 gas power plants. 7 of them in Beijing have been put into operation, and one is still under construction outside Beijing. The company holds 7 gas-thermal power plants in Beijing, with a installed capacity of 4.7GW, accounting for more than 40% of Beijing's gas power generation and more than 40% of Beijing's central heating capacity. In 2023, the company's gas power generation installed capacity was 4.7GW, accounting for 32.5% of the company's equity power generation installed capacity; the gas power generation volume was 19.422 billion kWh, accounting for 50% of the company's power generation. The company's gas power generation electricity sales signed a power purchase agreement with State Grid Beijing Electric Power Company, and the electricity price followed the guidance of Beijing Development and Reform Commission. The company's natural gas is all purchased from Beijing Gas Group Co., Ltd., and the natural gas purchase price also follows the guidance of Beijing Development and Reform Commission. Except for Jingfeng Gas, Future Thermal Power and Shangzhuang Gas, the thermal energy produced by other gas power plants is basically sold to Beijing Heating Group, and Beijing Heating Group delivers thermal energy to industrial or residential users in Beijing's network coverage areas.

The installation of renewable energy is expected to continue to grow rapidly.

In recent years, the company has focused on the "dual carbon" strategy and continued to increase investment in renewable energy projects. By the end of 2023, the company's renewable energy installed capacity will reach 9.78GW, accounting for 67.5% of the company's installed capacity, of which wind power is the largest type with 5.57GW, photovoltaic with 3.8GW, and small and medium-sized hydropower with 0.4GW. The company's wind power and photovoltaic installations are mainly distributed in Inner Mongolia, Shaanxi-Gansu-Ningxia, Jingjinji and South China and other regions where wind and solar resources are relatively abundant. The company's renewable energy business is expected to generate 19.468 billion kWh of power in 2023, accounting for 50% of the company's power generation. In 2023, renewable energy power generation contributed 38% of the company's revenue and 73.9% of the company's operating profit. The company is focusing on the "dual carbon" strategy, increasing the acquisition of renewable energy resources such as wind power and photovoltaics, and continues to layout large-scale projects such as offshore wind power projects. It is expected that the installation of renewable energy will continue to grow rapidly. The bank expects that the company's renewable energy installed capacity will continue to increase rapidly by 2.72GW in 2024. By the end of 2024, the company's renewable energy installed capacity is expected to reach 12.5GW, and the company's equity installed capacity will be increased to 17.2GW.

The company values shareholder returns and leads the industry in dividend yield, sharing the company's growth dividends with shareholders.

The company values shareholder returns and continues to increase the amount of dividends. In 12 years of listing, cumulative dividends have reached 6.78 billion yuan. From 2021 to 2023, the company's dividend ratios are 24.5%, 34.8% and 37.7%, respectively, with a continuous increase in dividend ratios. The company's dividend yield in 2023 is 7.2%, which is the highest among its peers. The company values shareholder returns and is willing to share the company's sustainable growth dividends with shareholders. On the other hand, the company's operating cash flow reached 11.27 billion yuan and 9.43 billion yuan in 2022 and 2023, respectively, and the strong operating cash flow is expected to support the company's continued high dividends. The bank expects the company to maintain its current dividend ratio in the future at least.

Risk warning: fluctuation of the on-grid electricity price of gas power generation; slower-than-expected growth in social electricity consumption; increase in wind or solar power abandonment rates.