The only carrier of energy-saving business of national power distribution network, and the net profit is growing rapidly.

In 2021 / 22Q1, the company achieved revenue of 31.46 million yuan, 10.67% year on year, and net profit of 5.05 million yuan, which was slightly lower than expected (560 million). The progress of energy saving transformation of distribution network was lower than expected. The company is the only power distribution and energy-saving business platform under the State Grid. After the injection of energy-saving assets in various regions of the State Grid in 21 years, we fully benefit from the demand for distribution network construction in various regions of the State Grid. We estimate that the return to the mother in 22-24 will be RMB 677 million (the previous forecast in 23 years is 611 million). Comparable company's 22-year Wind unanimously expects PE17.6x, considering that the company is the only distribution network energy-saving platform under the State Grid. The business advantage is obvious, give the company 22 years 20xPE, the target price is 15.6 yuan (the previous value is 17.52 yuan), maintain the "overweight" rating.

The energy-saving business of the distribution network has expanded smoothly, and the energy-saving demand of the national network is expected to increase, benefiting from the commissioning of the company's energy-saving projects and new acquisitions. In 21 years, the company's distribution energy-saving business achieved revenue of 1.736 billion yuan, an increase of 24.81 percent. In the past 21 years, we have successfully signed and started the third and fourth phases of Xinjiang projects, won the bid for energy-saving projects in Shaanxi and Shanxi, and rolled out the fifth and sixth phases of Xinjiang projects. The energy-saving business of distribution network mainly adopts the contract energy management mode: the company provides energy-saving services, and the revenue is recognized according to the proportion of energy-saving benefits during the sharing period since it was put into operation. By the end of the 21st, the progress of the first phase of Shaanxi and the fourth phase of Xinjiang has exceeded 80%. The Yuncheng project in Shanxi has been completed and is expected to release its performance in 22 years. According to the "double carbon" action plan of the State Grid, during the 14th five-year Plan period, the State Grid will focus on improving the electrification level of terminal consumption; promote the accelerated implementation of energy conservation and emission reduction, and reduce the level of carbon emissions. We believe that the demand for energy-saving transformation of the distribution network is expected to increase during the 14th five-year Plan.

The acquisition of assets to solve the problem of inter-industry competition fully benefits from the demand for energy-saving transformation of the national distribution network. At the end of the 20th, the company signed asset purchase agreements with provincial integrated energy companies to acquire energy-saving assets of local distribution networks. According to the announcement issued in December 20, the provincial comprehensive energy company signed a performance commitment compensation agreement with Fuling Electric Power, promising that the net profit of the existing asset package would not be less than 1.39,1.58 and 144 million yuan in 20-22 years, and the net profit of 152gambit in 20-22 years would be 1.52 trillion yuan. According to the 16-year agreement on the acquisition of energy-saving assets, the State Grid Company promised to solve the problem of inter-industry competition within the national network before 21 years. According to the company's 21 annual report, the promise has been fulfilled timely and strictly, and will fully benefit from the energy-saving transformation needs of the distribution network in the national network region in the future.

Power supply business ploughs Fuling to restore growth

In 2021, the company's power supply business achieved revenue of 1.408 billion yuan, an increase of 11.39%, and a positive growth. The company's power supply business is mainly concentrated in Fuling District of Chongqing, providing power supply and sales services for enterprises in the region. According to the National Bureau of Statistics, the electricity output of Chongqing has increased by 20.15% in the past 21 years. Fuling has been positioned as the main battlefield of Chongqing's industrialization and urbanization as well as an important manufacturing base. In 2021, the added value of the secondary industry in the region is 78.278 billion yuan, an increase of 6.7%. At the same time, the company benefits from the urbanization and industrialization of Fuling, and its performance is expected to grow steadily.

Risk hint: grid investment is not as expected; industry competition intensifies