Power operators under the State Power Investment Corporation are accelerating the transformation of new energy sources. The company is the only listed company of China Power Investment Corporation in the Northeast region whose main business is electricity and heat investment, production and operation. By the end of 2022, the company's installed power generation capacity was 1.3642 million kilowatts, +18.4%; of these, the installed capacity of thermal power was 3.3 million kilowatts, which remained basically unchanged; the installed capacity of photovoltaics was 5.796 million kilowatts, +34.8%; and the installed capacity of wind power was 3.2682 million kilowatts, +14.8% year-on-year. The company's growth has been steady in recent years. From 2018 to 2022, the company's revenue increased from 7.30 billion yuan to 14.96 billion yuan, with a compound annual growth rate of 19.6%; net profit of the mother maintained rapid growth, growing from 120 million yuan to 670 million yuan, with a compound annual growth rate of 55.5%.
Build a first-class clean energy platform with three advantages to ensure growth. In recent years, the installed capacity of scenery has increased, top-level plans have been introduced frequently, central state-owned enterprises have continued to increase investment, and the certainty of new energy sources has continued to increase. Since this year, the price of silicon materials has dropped by more than 60% compared to the beginning of the year, and photovoltaic modules have fallen below 1 yuan/W. We believe it will effectively boost operators' project yield and enthusiasm to start construction. With its endowment and years of accumulation, the company has established three obvious competitive advantages:
(1) Backed by China Power Investment, the first-mover advantage is obvious. As an established power company, the company has been transitioning to new energy sources since 2010 and has accumulated rich experience. (2) Based in Northeast China, the landscape resources are better. The Northeast region has leading wind energy and lighting conditions in the country, and the company is expected to continue to consolidate its advantages based in Northeast China. (3) Abundant thermal power resources to help consume green electricity. The company has 3.3 million kilowatts of thermal power installations, all of which have been remodeled to be flexible and have deep peak adjustment capabilities, which can help the consumption of wind power and photovoltaics.
Card level smart energy and hydrogen energy racetrack, and the transformation has accelerated for the second time. The company accelerates the pace of energy transformation and focuses on integrated smart energy, hydrogen energy and other industries: (1) Smart Energy: It focuses on developing digital energy technology, smart energy application scenario solutions, virtual power plants, etc., and many projects have been selected as outstanding national cases. (2) Hydrogen energy: On the operation side, the company plans to produce more than 2 million tons of hydrogen-based fuel per year in 2030, and has invested nearly 6 billion dollars to build an integrated demonstration project for the synthesis of ammonia from Da'an. On the equipment side, the company has invested in the domestic PEM electrolyzer manufacturer Changchun Lvdong, and the technical level has reached international advanced; through the linkage of project operation and equipment manufacturing, we are optimistic about the company's long-term development in the field of hydrogen energy.
Investment suggestions and valuation: As the power leader in the Northeast region, the installed capacity scale and profitability are expected to increase significantly as module prices continue to fall; at the same time, the company actively participated in hydrogen production from new energy sources, while also deploying green hydrogen project operation+equipment manufacturing. Long-term development is worth looking forward to. We expect the company's revenue from 2023 to 2025 to be 16.06 billion yuan, 17.59 billion yuan and 19.34 billion yuan respectively, with revenue growth rates reaching 7.4%, 9.5% and 9.9% respectively; net profit of 1.2 billion yuan, 1.43 billion yuan and 1.71 billion yuan respectively. First coverage, giving an investment rating of “increased holdings”.
Risk warning: New wind power and photovoltaic installations fall short of expectations, risk of coal price fluctuations, risk of a sharp drop in electricity prices, etc.