Main points of investment

In January 2021, wind power generation increased by 38.84%, exceeding expectations:

In January 2021, the total electricity generation of corporate equity was 471.73 GWh, an increase of 30.27% over the same period last year. Among them, wind power generation increased by 38.84% over the same period last year, while solar power generation decreased by 48.36% year-on-year. For the whole year of 2020, the cumulative power generation 4749.98GWh increased by 8.74 percent over the same period last year, of which wind power generation increased by 11.3 percent and solar power generation decreased by 11.22 percent.

Develop new 1GW projects and sell 600MW stock projects in each of the next 3 years:

The company plans to develop 1GW parity projects in each of the next three years, and plans to sell 600MW stocks that depend on subsidies, or new assets whose benefits are not very good. It is expected that in 2021-2023, a total of net new installed 1.2GW, together with the current 2.3GW, the company's installed capacity will reach 3.5GW by the end of 2023, of which 60-70% are parity projects. 1.2-1.5GW is expected to be added in 2021 and 2022, of which 70-80 per cent is wind power and 20-30 per cent is photovoltaic. Wind power projects are mainly distributed in provinces with good power consumption in the south, accounting for about 60-70%.

By implementing the "asset swap strategy", the company's cash flow will continue to improve:

In 2020, the company sold assets and subsidized accounts receivable of about 860 million yuan, which effectively reduced the asset-liability ratio and greatly improved cash flow. In the next three years, the company can recover about 2.5 billion yuan from the sale of 600MW projects every year, while the company develops 1GW projects every year, and the capital expenditure is about 1.5 billion yuan, that is, the rolling development of new projects can be realized through asset sales. The "asset replacement" strategy enables companies to achieve self-growth according to their own investment and construction capacity. on the one hand, stock projects generate a large amount of cash flow, on the other hand, the sale of assets generates a transaction premium, which can supplement the cash flow of project development.

Maintain the buy rating and raise the target price to HK $0.75:

At present, the company's 2021 PE is about 6.1 times, PB is about 0.74 times, and the dividend yield is about 4.25%. The valuation advantage is obvious. We raised the company's target price to HK $0.75, equivalent to 7.5 times PE and 0.94 times PB in 2021. The target price has 25% room to rise from the current price, maintaining the buy rating.