High-quality wind power assets have been connected to the grid one after another, and the Group's injection of assets has led to an increase in installed capacity; electricity prices are expected to remain at a high level due to tight electricity supply in Yunnan; the traditional salt industry has formed a profit safety cushion; and natural gas sales are expected to continue to rise.

It is a state-owned enterprise in Yunnan Province, and the two main businesses of “clean energy+traditional salt industry” go hand in hand. The company is a leader in the salt industry in Yunnan Province. Since 2016, it has expanded its natural gas business. In 2019, it laid out the new energy sector through acquisitions, becoming the ultimate platform for the Group to undertake new energy assets. As high-quality projects continue to be connected to the grid, the company's revenue and performance have grown rapidly. In 2019-2023, the compounded annual growth rate of the company's revenue was 10.7%, and the compound annual growth rate of net profit to mother was 16.4%.

Electricity supply in the province is tightening, and high-quality scenic resources help the development of new energy sources. Yunnan Province has excellent scenic resources. The number of hours used for power generation is higher than the national average, and is affected by the climate. The local windy season overlaps with the dry water period. Wind power can complement hydropower to form electricity, and the consumption of new energy sources is relatively good. At the same time, as the hydropower development process slows down and the electricity consumption of energy-intensive enterprises such as electrolytic aluminum continues to grow, local electricity supply is tight, and market-based electricity prices are showing an upward trend.

New energy projects are expected to continue to grow at a high rate, and the traditional salt industry forms a profit safety cushion. The site where the company's newly put into operation wind power projects has good wind energy resources. The number of hours used is higher than the national and provincial average, the profitability is excellent, and the company has sufficient reserves of resources. It is expected that as the company's self-built wind power projects are connected to the grid one after another and the group level continues to inject photovoltaic assets, the company's overall performance will benefit from the growth of new energy installations and maintain a high growth rate.

At the same time, the company maintains a leading position in the traditional salt industry. Revenue from the table salt business has grown steadily, and gross margin has maintained a high level, forming a safety cushion for the company's profits. Due to the large gap between the actual gas transmission volume of the branch line pipeline already in operation and the designed gas transmission volume, the company's natural gas business continues to lose money. However, as project construction continues to advance, the company will gradually improve the layout of the natural gas industry chain. In the context of energy transformation, it is expected to benefit from continued growth in downstream demand, and gas sales are expected to increase steadily.

Profit forecasting and valuation. High-quality wind power assets have been connected to the grid one after another, and the Group's injection of assets has led to an increase in installed capacity; the electricity supply in Yunnan is tight, and the high wind season overlaps with the dry water period, so electricity prices are expected to remain at a high level; the leading position in the traditional salt industry is stable, forming a profit safety cushion; demand for natural gas is growing in the context of energy transformation, and gas sales are expected to continue to rise. The company's revenue for 2024-2026 is expected to be 4.139, 5.294, and 6.55 billion yuan, respectively, up 42.5%, 27.9%, and 23.7% year-on-year; net profit to mother is 0.671, 0.823, and 0.909 billion yuan, respectively, up 39.1%, 22.6%, and 10.5% year-on-year. Current stock prices correspond to PE 16.6x, 13.5x, and 12.2x, respectively. Covered for the first time, a “gain” rating was given.

Risk warning: Scenery resources fall short of expectations, project acquisition and construction progress fall short of expectations, risk of fluctuations in feed-in tariffs, and risk of cyclical macroeconomic fluctuations.