Investment summary
Valuation and investment advice
CGN New Energy is the only clean energy listing platform for CGN's non-nuclear power business, which is the leading company in China's carbon neutralization track. The group has rich scenery resources and abundant capital. The company has a clear and active strategy, mature management system and low financing cost, and has a significant competitive advantage in the development market. The new energy power generation industry is in the stage of parity and rapid development, and it has a deterministic prospect of continuous growth for 30 years under the guidance of carbon neutralization policy. The company is currently shipping new energy installed 4.1GW, and the self-built 600MW offshore wind power project will be put into production by the end of 2021, and the annual construction of new energy projects is not lower than 1GW during the 14th five-year Plan period, so high-speed growth can be expected in the next 2-3 years. It is estimated that the company's net profit from 2021 to 2023 will be 14.95 soybean 18.05 / 1.877 billion yuan, with a year-on-year growth rate of 57.0%, 20.2% and 3.9%, and diluted earnings per share of 0.35 trillion 0.42 soybean 0.44 yuan. Combined with the absolute and relative valuation methods, we give the company a reasonable valuation range of 4.93-5.48 yuan, equivalent to HK $5.94-6.60 (HK $1 = HK $0.83), corresponding to 2021 PE 2022 / 2023 dynamic PE is 2.5pm 1.9 times, 2021pm 2022 / 2023 dynamic CPM 14.9 times 11.9 times, compared with the current stock price premium 103-125%. For the first time, coverage gives a "buy" rating.
Core hypothesis and logic
First, wind power and photovoltaic will become the backbone of China's carbon-neutral energy transformation. supported by a highly flexible grid, wind power and photovoltaic power generation will account for 35% and 32% of the total power generation in 2050. the total power generation has increased from 730 billion kilowatt hours in 2020 to more than 12 trillion kilowatt hours, and the new energy power generation industry has broad prospects.
Second, the company relies on CGN and actively absorbs high-quality projects. During the 14th five-year Plan period, the average annual increase in wind power and photovoltaic installed capacity is not less than 1GW; third, relying on CGN's southeast coastal location advantages, the company will be connected to the 600MW offshore wind power project by the end of 2021, igniting a new round of performance growth.
The difference from the market
First, the market believes that CGN New Energy has not been loaded into all the group's new energy assets, and its future development positioning is not clear; we believe that as the group's only new energy listing platform, the company will actively absorb the group's high-quality scenery resources, and the annual new installed capacity will not be lower than 1GW. The listing platform status of CGN is the greatest value the company has.
Second, the market believes that it is difficult to parity after the land breeze and sea breeze are compensated, and the profits of operators deteriorate significantly and the growth is weak. We believe that with the technological progress at the equipment end and the reduction in costs driven by large-scale construction, there is still hope that parity / low-cost new energy power generation will have an ideal rate of return on full investment of more than 6% in the future.
Third, the market believes that the default of subsidies seriously affects the follow-up investment ability of enterprises, and we believe that the state has actively introduced various policies to encourage commercial banks to support new energy enterprises to obtain normal loans for new projects with the amount of subsidies receivable. Coupled with the increasing proportion of parity projects, the capital of follow-up investment will not become a bottleneck.
The Catalytic factors of Stock Price change
First, China's 14th five-year energy planning and special plans to deal with climate change, the establishment and improvement of carbon trading market mechanism.
Second, the approved capacity of new energy in 2021 has a strong reference significance for the development scale of the company from 2022 to 2023.
Fourth, the discussion and introduction of the policy to solve the default of stock subsidy.
The main risks of core assumptions or logic
First, domestic new energy power generation planning is not as expected during the 14th five-year Plan; there is a bottleneck in domestic new energy construction and consumption; second, the electricity price of new bidding projects is lower than expected.
Third, the company is building offshore wind power projects can not be completed on time, the risk of losing subsidy qualifications; fourth, interest rates upward increase the company's financial costs.