The company is a new energy platform under the Datang Group and was recently listed by insurance funds. The controlling shareholder of the company is Datang Group. By the end of 2023, Datang Group had a total shareholding of 65.61%. As of 24H1, the company held a total of 15.55 million kilowatts of installed capacity, YOY +8.6%. Among them, wind power/photovoltaics were 13.11/2.44 million kilowatts, YOY +2.6%/+57.6%, respectively. In the first half of 2024, the company's main business revenue was 6.63 billion yuan, YOY -5%; net profit to mother was 1.77 billion yuan, YOY -15.7%. On August 15, Great Wall Life increased its holdings of Datang New Energy by 5 million shares, involving HK$10.2935 million. After the increase, Great Wall Life recently held 0.127 billion shares, and the shareholding ratio increased to 5.08%.

The Group's priority player in developing new energy projects, and wind power installations are expected to accelerate construction. The Group signed the “Avoidance of Competition Agreement” in 2010, promising that the company will prioritize the development of new energy business for the Group and grant the company the right to choose and buy relevant business assets in the event of restructuring matters. As of 2023, the company has a project capacity of 1.833 million kilowatts, and has obtained a total investment and construction target of 3.58 million kilowatts for new energy projects throughout the year. We expect the company's installed capacity to maintain steady growth.

The transformation of old fan sets is expected to keep the company's installed capacity growing on a rolling basis. On the one hand, the transformation of old units is expected to increase the utilization of high-quality wind resources in existing projects and improve the yield level of the project. At the same time, it is also expected to expand the installed capacity scale through “capacity expansion and transformation”. The capacity of the company's surviving units in 2010 and before reached 4.028 million kilowatts. Assuming a 70% technical improvement rate and 2 times capacity expansion, the potential increase in the company's installed capacity exceeds 5.6 million kilowatts; with renewed stock units, senior wind power operators are expected to enter a long-term virtuous cycle development channel.

Recently, green power policies have been introduced frequently, and the green power market is expected to usher in new opportunities. In January and July, Inner Mongolia issued a draft for comments, and plans to implement a mandatory renewable electricity consumption mechanism for enterprises with high energy consumption stocks. In 2024, League City will determine the list of compulsory consumer enterprises and try it first. Achieve full coverage of energy-intensive enterprises by 2025.

2. In 2024, the national renewable energy electricity consumption weight was issued, and the total consumption weight increased by about 3 pcts in 2024 (of which Heilongjiang increased 8.1 pct, Ningxia increased 7.8 pct, and Jilin increased 7.2 pct), and the national average increase in non-hydropower consumption weight increased by about 3.9 pct (of which Heilongjiang increased 7.3 pcts, Henan increased 7.0 pct, and Hainan increased 7.0 pct), while adding renewable energy consumption responsibilities for the electrolytic aluminum industry. We believe that the recent green power policy focuses on guiding green electricity consumption, the green power environmental premium is expected to gradually become prominent, and the increase in the environmental value of green power enterprises is worth paying attention to.

Profit forecasting and valuation. We expect the company's net profit to mother in 24-26 to reach 2.94/3.09/3.34 billion yuan. Excluding interest on perpetual bonds, the corresponding EPS would be 0.33/0.35/0.39 yuan. Referring to the 24-year average PE of comparable companies, the company was given 6-7 times PE in 24 years, converted according to the exchange rate of 1HKD = 0.91 CNY, corresponding to a reasonable value range of HK$2.2-2.5. For the first time coverage, the rating was superior to that of the market.

Risk warning. The installed capacity growth rate was lower than expected, asset injection was progressing slowly, and depreciation due to “big generation to small” calculation, etc.