National network energy-saving listing platform, energy-saving business opens a new chapter
The company is a listed platform of State Grid Integrated Energy, which is mainly engaged in distribution network energy saving and power sales in Fuling area. The comprehensive energy business is the direction of the national network, the project operation mode in the field of distribution energy saving is mature, the time to remove the inter-industry competition is approaching, the asset injection is advancing steadily, and the company is expected to enjoy the distribution network transformation business market in the national network region. We estimate that the company's 20-22 EPS will be 0.95, 1.14, 1.30 yuan, respectively, with a target price of 18.24 yuan, covering it for the first time and giving an "overweight" rating.
Integrated energy business has entered the fast track of development, and the distribution network energy-saving profit model is mature. Comprehensive energy business is a strong starting point to reduce terminal power costs and increase national grid revenue. The State Grid has high hopes for integrated energy business. According to the comprehensive energy business plan of the State Grid, it is planned that the revenue of the integrated energy business of the State Grid will exceed 20 billion yuan in 20 years, 80 billion yuan in 25 years, and 300 billion yuan in 30 years, with a compound growth rate of more than 35%. The comprehensive energy business of the national grid is divided into four sectors, including comprehensive energy efficiency, distributed clean energy, multi-energy services and electric vehicles, in which the energy-saving business of the distribution network has the highest correlation with the main business of the power grid, and the profit model is mature. Reducing line loss is the focus of national power network and policy, and the promotion of power marketization is expected to further stimulate the demand for energy-saving transformation of local power distribution enterprises. After solving the problem of inter-industry competition within the national network, the company is expected to fully share the energy-saving transformation market of the distribution network in the national network region.
Abundant energy-saving projects, solve inter-industry competition and further open profit space according to the company's major asset purchase and related party transaction report and annual report, by the end of 19th, the company had completed 21 projects and 7 uncompleted projects. Energy-saving projects are abundant in hand. The national network promised to solve the problem of inter-industry competition in the network 21 years ago, and the asset injection of provincial comprehensive energy companies has made steady progress. According to the performance compensation agreement, it is proposed to inject assets for 20-22 years with a net profit of not less than 1.38 trillion yuan, which is expected to thicken the company's performance. Based on the 19-year line loss rate and electricity consumption of the national power grid, the potential market space of the distribution network energy-saving business is about 23.6 billion, and the company's energy-saving business profit space is expected to be further opened.
Fuling electricity consumption resumes growth, and the decline in gross profit margin is expected to ease the electricity sales business mainly to earn the price difference between transmission and distribution. The epidemic affects electricity demand during the year. By the end of October, China Power Union expects electricity consumption to increase by 2-3%. We believe that electricity consumption in Chongqing is expected to increase steadily this year.
The market share of the company in Chongqing is stable, the promotion of industrialization leads to the increase of industrial and commercial electricity consumption, and the reduction of electricity price has a limited impact on the company's revenue. Chongqing has set a 21-year electricity price policy, with the two-part electricity price falling by less than 2.85% compared with 20 years. Considering that 20-year industrial and commercial electricity prices and large-scale industrial electricity prices are settled according to 95% of the selling price, the company's average electricity price is expected to rise next year, alleviating the decline in gross profit margin.
With the trend of comprehensive energy, the national grid energy-saving listing platform opens a new chapter. As the listed platform of the national grid energy-saving company, the distribution network energy-saving projects are abundant. As the time to solve the inter-industry competition is approaching, the provincial energy-saving assets will be injected. The company is expected to open a new chapter in development. Without considering the business injection, we estimate that the company's EPS for 20-22 is 0.95 Wind 1.14 plus 1.30 yuan respectively, which is comparable to the company's 2021 Wind consistency expectation average PE of 15.81x. We give the company 16 times PE in 2021, with a target price of 18.24 yuan, covering for the first time and giving an "overweight" rating.
Risk hints: the risk of changes in preferential tax policies; the lower-than-expected risk in the construction of energy-saving projects in distribution networks; and the risk of continuous decline in electricity prices.