Fujian Seabreeze operator's first quarter results were disrupted by wind resources. By the end of '23, the company's installed capacity reached 0.9573 million kilowatts, of which the land wind and sea wind installed were 0.611/0.296 million kilowatts respectively. In '23, the company achieved revenue of 1.73 billion yuan, YOY -3.3%, net profit to mother of 0.68 billion yuan, and YOY -6.9%. The company achieved operating income of 0.47 billion yuan, YOY -16%, and achieved net profit of 0.21 billion yuan and YOY -22.2% in 24Q1. The decline in performance was mainly due to poor wind resources. The company issued a power announcement. The Q2/H1 wind power generation capacity was 0.6/1.37 billion degrees, YOY +29%/-2%, and the estimated wind power utilization time was 662/1515 hours, +150/ -23 hours compared to the previous year.
The approved Sea Breeze is expected to accelerate construction, and we look forward to another good result in this year's competition. The Group won the Changle Zone B (adjustment) project (0.1 million kW) and the Changle Offshore Zone I (South) project (0.3 million kW) in the 2023 offshore wind power market-based competition in Fujian Province. (1) Among them, the Changle Area B (adjusted) project was announced to be built and operated by the company in May of this year. According to the assumption that the sea breeze costs 0.011 million/kW and uses 4,000 hours per hour; considering the one-year construction period, we estimate that the project is expected to increase the company's net profit by 0.012 billion yuan in 25 years (put into operation in 25 years) and contribute 0.024 billion yuan in profit for the full year of '26. (2) According to the Polaris wind power grid, the Changle Offshore Zone I (South) project (0.3 million kilowatts) was signed in June '24. (3) We believe that the company has a provincial background and rich experience in marine wind operation and maintenance, and is expected to achieve good results in a new round of project allocation in 24 years.
Focus on Group Asset Injection:
(1) The four Yongtai Pumped Storage Power Plant units (1.2 million kilowatts in total) were completed and put into operation at the end of 23Q1, with a total project investment of 6.7 billion yuan. According to the 20% capital ratio and 6.5% project ROE, it is expected to contribute about 0.087 billion yuan in annual profit, corresponding to a net profit of about 0.044 billion yuan (Group holding 51%); (2) The third phase of the Putian Pinghai Offshore Wind Farm project (installed capacity 0.308 million kilowatts) was completed in 2021 The capacity is connected to the grid, and it is estimated that the project is expected to achieve a net profit of about 0.54 billion yuan for the whole year, corresponding to the net profit of the group's mother of about 0.49 billion yuan (90% of the group holding shares). The company announced in December 2023 that the project is awaiting the project subsidy compliance verification results. Within three months after the verification results are confirmed, the group will fully negotiate with the company to begin the asset injection process for the third phase of the sea power project;
(3) The Xiapu Offshore Power Zone B project was approved in 2021, and the relevant formalities are being carried out before commencement. According to the estimated project cost of 11,000 yuan/KW and 4,000 hours of use, the project is expected to achieve a net profit of 0.13 billion yuan for the whole year, corresponding to a net profit of about 0.06 billion yuan (51% of the group's holdings).
Profit forecasting and valuation. We assume (1) that wind resources return to the average level of the past three years, and that the company's wind power project profit is expected to increase by about 0.07 billion yuan; (2) in addition, the Heilongjiang biomass project lost 0.06 billion yuan in 23 years due to equipment problems, assuming a break-even balance in 24 years; (3) without considering asset injection, the company is expected to achieve a net profit of about 0.8 billion yuan to the mother in 24, and the net profit to mother in 25-26 is 0.82/0.85 billion yuan, corresponding to 24- The 26-year EPS was 0.42/0.43/0.44 yuan. Comparable to the average PE of the company in 24 years, the company was given 14-16 times PE in 24 years, corresponding to a reasonable value range of 5.88-6.72 yuan. The first coverage was superior to the market rating.
Risk warning. The incoming wind fell short of expectations, and the progress of the sea breeze construction fell short of expectations.