Incidents:
The company released the “2022 Semi-Annual Report” after the market closed on August 26, 2022, the first domestic virtual power plant management center was established in Shenzhen on August 26, the National Energy Administration issued “Effectively Promoting the Balance between Power Grid Supply and Demand, Virtual Power Plant Capabilities Are Not “Fictitious” on August 27, and the company stated on the investor interactive platform on August 29 that it had undertaken projects such as the construction of a data management information platform for China Southern Power Grid Hainan Institute of Mathematics and Research.
Commentary:
Under the Shenzhen epidemic, profit growth broke expectations. In Q2, the company's net profit increased 42.53% year-on-year. In the first half of 2022, in the face of the severe business situation in Shenzhen, the company responded positively, responded quickly, comprehensively controlled risks, and achieved operating income of 429 million yuan, an increase of 8.63% over the same period last year; net profit attributable to the company's shareholders during the same period was 38,3669 million yuan, an increase of 12.67% over the same period last year. The company still achieved operating income of 304 million in the second quarter, an increase of 2.83% over the previous year, and Guimu's net profit was 41 million, an increase of 42.53% over the previous year, exceeding expectations. As a leading provider of integrated energy services, communication design and IoT application solutions in China, the company is expected to seize comprehensive energy service opportunities and provide broad market space for the company's development in the second half of the year when the epidemic was mitigated and the country's “double carbon” strategy and digital transformation and upgrading accelerated.
High temperatures and droughts increase electricity consumption load. Virtual power plants are of great significance in promoting the balance between supply and demand in power grids. On August 27, the National Energy Administration issued “Effectively Promoting the Balance between Supply and Demand in Power Grids, Virtual Power Plant Capabilities Are Not “Failing”. The article mentions that since the beginning of summer, high temperatures above 35℃ have occurred in many parts of the country, and many cities have experienced high temperatures continuously. Due to the hot and arid weather, the electricity consumption load in our country is growing rapidly. If the electricity consumption load remains high for a long period of time and the power grid continues to withstand overload and heavy load pressure, it may cause power grid safety accidents and cause large-scale power outages. As an energy management system, Hengshi Technology's virtual power plant scheme is installed in the control terminals of large electricity users such as factories, etc., and incorporates interruptible loads such as air conditioning and lighting into the control sequence. Without affecting the normal production of the enterprise, the balance between supply and demand is achieved through precise control, which is of great practical significance in promoting the balance between supply and demand of the power grid, connecting distributed energy to the grid at low cost, fully consuming clean energy generation, and promoting green energy transformation.
The Shenzhen Virtual Power Plant Management Center was formally established, and the virtual power plant industry is expected to take advantage of the momentum. On August 26, the Shenzhen Virtual Power Plant Management Center officially held an unveiling ceremony, becoming the first virtual power plant management center in the country. The management center has been connected to 14 load aggregators of distributed energy storage, data centers, charging stations, subways, etc., with an access capacity of 870,000 kilowatts. The Shenzhen Virtual Power Plant Management Center will accelerate the promotion of distributed energy such as distributed photovoltaics, user-side energy storage, and v2g (energy interaction between new energy vehicles and power grids) to centralized management of virtual power plants. As a leading enterprise in the virtual power plant industry, Hengshi Technology is expected to take advantage of the wind, expand the scale of business promotion, and implement virtual power plant projects in many places.
Investment advice and profit forecasting
The company is a leading enterprise in the virtual power plant industry. The company has expanded its business in the past two years, and short-term profits have fluctuated, but the main reason is the rise in the cost rate and loss of impairment of goodwill in the context of rapid expansion. As the introduction of state-owned shareholders enhances the company's core competitiveness, market-based power transactions are gradually implemented, and the value of virtual power plant resource aggregators is highlighted, and the company's profitability will increase significantly. The company's revenue for 2022-2024 is estimated to be 1,620 million, 1,937 million, and 2,263 million, respectively, and net profit of 141 million, 173 million, and 211 million. The PE corresponding to the current stock price is 29.22, 23.81, and 19.59 million. Maintain an “increase in holdings” rating.
Risk warning
New business development falls short of expectations, increased market competition, risk of exchange rate fluctuations, and goodwill calculation risk.