In the current profound change in the global energy landscape, reducing carbon emissions and promoting green growth has become a core demand of social development.

In this transformative battle for the future, achieving low-carbon transformation under the dual carbon target is more like a competition in new technologies and new markets.

In this race, Tg Smart Energy (referred to as 'Tg Smart'), which is leading the race, may provide us with some ideas and inspiration.

1. Unlocking the potential opportunities of renewable energy under the dual carbon target.

The dual carbon target aims to achieve carbon peak by 2030 and carbon neutrality by 2060. This goal not only leads the optimization and upgrading of the energy structure, but also provides solid technical support for the development of large-scale energy through innovations in photovoltaics, wind energy, and other renewable energy fields, and has generated a series of supporting policies and market opportunities.

On the one hand, the synergy of policies provides a solid foundation for the high-quality development of renewable energy.

For example, this month, the top-level design document "Opinions on Accelerating the Comprehensive Green Transformation of Economic and Social Development" was released, which takes the lead in carbon peak and carbon neutrality work, coordinates and promotes carbon reduction, pollution reduction, afforestation, and growth, deepens ecological civilization system reform, improves mechanisms for green and low-carbon development, and provides clear action guidelines for accelerating the comprehensive green transformation of economic and social development.

Previously, the "14th Five-Year Plan for Renewable Energy Development" aims to increase the proportion of non-fossil energy consumption to 20% by 2025, emphasizing the leading position of wind power, solar power, and other renewable energy sources in the incremental energy consumption. Meanwhile, the "14th Five-Year Plan for Energy Technological Innovation" focuses on advanced renewable energy, new power systems, and energy digitization and intelligence, and formulates technology research roadmap.

On the other hand, under the 'dual carbon' goal, the market's demand for low-carbon and eco-friendly energy is increasing day by day, which has become an indisputable fact.

China plays a particularly crucial role in this transformation. The International Energy Agency's '2023 Renewable Energy' annual market report shows that in the next 5 years, global renewable energy installed capacity will experience rapid growth. As a global leader in renewable energy, China is expected to account for 60% of the world's new renewable energy generation by 2028.

The rapid increase in various energy transformation data is gradually verifying this point.

According to publicly available data, as of the end of June 2024, China's renewable energy installed capacity has reached 1.653 billion kilowatts, accounting for 53.8% of the total installed capacity, accelerating the pace of energy green transformation. At the same time, resource utilization efficiency continues to improve. In 2023, China's energy consumption per unit of GDP and carbon intensity have decreased by more than 26% and 35% compared to 2012, with the primary resource output rate increasing by over 60%.

With the continuous optimization and upgrading of the industrial structure, China has established the world's largest and most complete new energy industry chain, which not only strengthens domestic energy security, but also provides strong support and demonstration for the global energy structure's green transformation.

2. Transitioning to green energy, advanced services for carbon reduction are accelerating.

Of course, the underlying support logic for achieving the dual carbon goal ultimately depends on the transformation and upgrading of enterprises.

Compared with other countries worldwide, European countries like the United Kingdom, France, and Germany achieved peak carbon emissions in the 1970s, planning to achieve carbon neutrality by 2050, with a transition period of over 70 years; the USA peaked in carbon emissions in 2007 and also aims for carbon neutrality by 2050, with a 43-year transition period.

Compared to other countries, China has committed to achieving carbon peak by 2030 and carbon neutrality by 2060, which means that we need to complete the challenges of industrial and economic transformation in a shorter period of time, and the urgency is self-evident.

In this context, TG's energy and carbon service strategy is becoming a new benchmark for industry development and playing a leading role in the green energy transformation.

In order to achieve the goals of 30-60 carbon and solve the challenges brought by the instability of wind and solar power supply and the difficulty of consumption, TG has relied on its existing natural gas business to transition from a single energy source to comprehensive energy services.

Through the development of zero-carbon smart parks, TG has built a comprehensive energy and carbon management service that includes distributed photovoltaics, carbon management, green energy trading, and energy storage. It has formed a comprehensive smart energy service model with TG's own characteristics.

As of the first half of 2024, the company has implemented the development of 128 zero-carbon smart parks, with a cumulative photovoltaic contract capacity of 3.3 gigawatts and grid-connected capacity of 2.1 gigawatts, and has developed renewable energy projects in 23 provincial-level administrative regions.

Taking the examples of the Virtual Power Plant (VPP) and Energy-as-a-Service (EaaS) national demonstration projects, in November last year, the VPP national demonstration project led by TG - the first public institution VPP in Shenzhen was officially put into operation, effectively solving the bottleneck problem of high load operation in the Futian District Committee compound and realizing the flexible dispatching and energy mutual assistance of new energy. It also provides a solution to the problem of insufficient capacity caused by the installation of charging stations in old communities.

In April of this year, the first industrial EaaS demonstration project in Shenzhen - the Ping Shan Kaiwo Automotive EaaS project invested and operated by TG was officially connected to the grid, marking a phased progress in TG's optimization and control of microgrids. The competitive advantage of its 'photovoltaic + energy storage + power sales' service has been further strengthened.

Moreover, TG is continuously advancing in the field of renewable energy business to achieve more breakthroughs and gain more market share and resources. Benefiting from economies of scale, it is achieving a virtuous cycle of high growth.

For example, the launch of the first sulfur-based liquid flow battery energy storage system charging station with storage demonstration project in collaboration with Yi Chi New Energy in the first half of the year signifies a significant progress in energy storage technology.

In conclusion, the results achieved in the first quarter demonstrate that AI capabilities have brought new opportunities to the company. With the continuous increase in the penetration rate of large models, continuous enhancement of product performance, diversification of landing scenarios, and further expansion of overseas business, Cheetah Mobile is expected to welcome a broader development space.

The deep cultivation in the gas industry over the years has given Honghua a deeper understanding of the significance and changes in energy transformation.

With the completion of more new projects, it is believed that Honghua's renewable energy business will continue to grow, becoming one of the important pillars for the company's future business development.

Nowadays, the core underlying logic of Honghua's valuation should also shift from the perspective of a single gas energy to the transformation of comprehensive energy services, which may bring about a new round of value reevaluation for the company.

From the perspective of professional institutions, many brokerages hold positive expectations for Honghua's valuation growth in the future. For example, China International Capital Corporation has given a rating of "outperform the industry" with a target price of HK$3.80, while Huatai Securities maintains a "buy" rating and a target price of HK$3.93.

For Honghua, it is believed that the market will eventually have its own judgment.