Description of the event
The company announced the main operating conditions from January to May 2024. The total number of new contracts signed from January to May 2024 was 478.474 billion yuan, +6.78% year over year, including energy and electricity of 288.431 billion yuan, +28.06% year on year, water resources and environment 73.269 billion yuan, -1.29% year on year, and 97.165 billion yuan for urban construction and infrastructure, or -29.94% year on year.
Incident comments
The energy and power business has continued to maintain a high growth rate since this year, but in a month-to-month perspective, the growth rate slowed in May. The total number of new contracts signed in January-May 2024 was 478.474 billion yuan, +6.78% year-on-year, including 288.431 billion yuan for energy and electricity, +28.06% year-on-year. Looking at a single month, the total number of new signings in May was 72,062 billion yuan, or -5.05%; of these, energy and electricity were 41,987 billion yuan, 7.90%; water resources and environment were 8.694 billion yuan, or -43.15%; urban construction and infrastructure amounted to 18.983 billion yuan, -10.45% year over year; and other 2,398 billion yuan, or 391.39% year on year. The growth rate of new energy and electricity contracts has fluctuated to a certain extent. The main reason may be that the owners' contract delivery schedule has slowed down to a certain extent. According to the International Energy Network, the bid for the 34.0 GW PV module procurement project was finalized in April, and the procurement project for about 21.6 GW PV modules was decided in May, with a certain decline over the previous year.
By region, the overseas growth rate in January-May was higher than domestic growth, but it turned negative year-on-year in a single month. From January to May, domestic 404.608 billion yuan, 6.31% year on year; overseas 73.865 billion yuan, 9.43% year on year; in a single month, domestic 63.122 billion yuan, -5.33% year on year; overseas RMB 8.939 billion, or -3.03% year on year.
Infrastructure investment data shows that electricity is still an important support for fixed asset investment. Based on this, we believe that the company's energy and electricity orders are expected to maintain a high growth rate throughout the year. Looking at the month of May, electricity investment still performed best, and the growth rate of water conservancy investment picked up month-on-month. In the same month, infrastructure investment in the narrow sense increased 4.9% year on year, and the growth rate decreased by 0.2 pct; general infrastructure investment increased 3.8% year on year, and the growth rate decreased by 2.1 pct month on month; among them, investment in the production and supply of electricity, heat, gas and water increased 17.7% year on year, and the growth rate decreased by 3.0 pct month on month; investment in transportation, storage and postal services increased 3.7% year on year, and the growth rate decreased by 5.0 pct month on month; investment in water conservancy, environment and public facilities management decreased by 2.7% year on year, and growth rate increased 0.9 pct month on month.
Continued promotion of the dual-carbon policy will drive growth, and new energy+pumped storage will form a future growth point. 1) In terms of policy, the 2021 State Council's “Pre-2030 Carbon Peak Action Plan” emphasizes vigorously developing new energy, comprehensively promoting large-scale development and high-quality development of wind power and solar power generation, and speeding up the construction of wind power and photovoltaic power generation bases. By 2030, the total installed capacity of wind power and solar power generation will reach more than 1.2 billion kilowatts, and the wind power photovoltaic market has great potential for growth. The Energy Administration issued the “Medium- and Long-Term Development Plan for Pumped Energy Storage (2021-2035)”. By 2025, the total production scale of pumped storage will be over 62 million kilowatts; by 2030, the total production scale will be around 120 million kilowatts. 2) During the reporting period, the shareholding system transformation of Dengjian New Energy Company was successfully completed. The company obtained three indicators, including new construction targets, new investment projects, and new construction projects for the whole year, all exceeding 10 million kilowatts. At the same time, the company is focusing on optimizing the energy and power business, seizing new energy markets such as pumped storage, photovoltaics, wind power, etc., and actively transitioning to clean and low-carbon energy. By the end of 2023, the company controlled a grid-connected installed capacity of 27.885 million kilowatts, an increase of 33.39% over the previous year. Among them: wind power installed capacity was 8.412,800 kilowatts, up 9.97% year on year; solar power generation installed capacity was 7.7271 million kilowatts, up 189.66% year on year. Overall, clean energy accounts for 84.6%. Continue to be optimistic about future opportunities for operator transformation. The company is expected to achieve net profit of 14.99 billion yuan and 17.13 billion yuan in 2024 and 2025, corresponding to the current stock price PE: 6.0 and 5.2 times, respectively, with a “buy” rating.
Risk warning
1. Policy progress fell short of expectations; 2. Raw material prices fluctuated greatly.