Main points of investment

In mid-2021, profits increased by 6.3% compared with the same period last year, and asset quality was continuously improved:

In the first half of 2021, the company's revenue was about 970 million yuan, down 2.9% from the same period last year; the profit attributable to shareholders was about 403 million yuan, an increase of 6.3% over the same period last year; and the basic earnings per share was 4.9 cents, and the company's performance was in line with expectations. In recent years, the company continues to implement the asset exchange strategy, withdraw funds to develop high-quality parity projects, and constantly optimize the quality of assets. During the period, the company's wholly-owned wind power project utilization hours reached 1384 hours, leading the industry, and the comprehensive power cost reached 0.2623 yuan per kilowatt, down 9.58% from the same period last year.

In July 2021, wind power generation increased by 35.74%, with excellent performance:

The company's equity power generation 390.7GWh in July 2021 increased by 26.89% over the same period last year, of which wind power generation was 367.25GWh, up 35.74% year on year. From January to July, the company's total equity power generation was 3052.5GWh, an increase of 10.16% over the same period last year, of which wind power generation was 2911.03GWh, an increase of 16.96% over the same period last year.

In the next 3 years, more than new 1GW will be installed each year, and the performance will continue to grow steadily:

By the end of June 2021, the company's operating rights and interests installed capacity is about 2406MW, of which the wholly-owned power plant rights and interests capacity 1775MW, accounting for 74%. The construction scale of the project will reach 1743MW in the first half of 2021, and it is planned to install about 1GW each year in the next three years, supporting the steady growth of future performance. In the first half of the year, the company returned a total of about 1 billion yuan through project transfer to support the development of parity projects. At present, the company has put into production parity project up to 438MW, under construction parity project up to 1613MW. The green card of the parity project has started trading, and after the national carbon trading is officially launched, CCER is preparing the management and trading center in Beijing, which is expected to help improve the revenue of the parity project in the future.

Seriously undervalued, maintain the buy rating and raise the target price to HK $0.98:

At present, the company's PB is only 0.71 times, which is much lower than the valuation level of comparable companies in the industry. We raised the company's target price to HK $0.98, which is equivalent to 8 times PE and 1.0 times PB in 2021, and the target price has 44% room to rise from the current price, maintaining the buy rating.