Jingu financial news | Huayuan Securities research points out that after years of development, China Suntien Green Energy (00956) has formed a main profit pattern with wind power as the main focus and henry hub natural gas as the secondary: in 2023, it achieved revenue of 20.282 billion yuan, net income attributable to the parent company of 2.207 billion yuan, with the wind power and photovoltaic divisions contributing approximately 2/3 of the net income attributable to the parent company, while the henry hub natural gas division contributes about 26% to the net income attributable to the parent company.

The bank points out that in recent years, with the acquisition of downstream city gas projects, the company's retail gas volume proportion has gradually increased, driving the overall gas sales and purchase price difference to improve. The first phase of the Tangshan LNG project and the outbound pipeline were completed and put into operation in 2023. LNG has become a major source of incremental gas sales. In the first half of 2024, gas sales volume is 3.017 billion cubic meters, of which LNG sales volume is 0.691 billion cubic meters, exceeding the total for 2023. The total annual gas sales volume in 2024 is expected to increase by more than 25%. In the case of international natural gas prices returning to a reasonable range, the Tangshan LNG project will also help improve the company's gas source cost control level. In addition, the Hebei price parity work has been fully implemented in 2023, and the company's retail gas volume gross margin is expected to rebound.

The bank stated that at the current point in time, against the backdrop of significantly improving liquidity in Hong Kong stocks and the return of market risk appetite, the overall valuation of the green electricity sector is expected to rise; as an asset with relatively high quality in the sector, the company's valuation level is expected to recover rapidly.

The bank predicts that the company's net income attributable to the parent company for the years 2024-2026 will be 2.38, 3.07, and 3.41 billion yuan, respectively, with year-on-year growth of 7.8%, 29.0%, and 11.1% respectively. Conservatively not assigning a valuation to other businesses at this time, the company's intrinsic value is approximately 27.4 billion Hong Kong dollars, still about 49% higher than the current market cap. Initial coverage is given a 'buy' rating.