Key points of investment

The parent company injects new energy assets in batches, which is beneficial to both increasing the company's profit valuation:

The company announced that it recently received a notice from the controlling shareholder National Energy Group. In order to implement the “Supplementary Letter of Commitment of China Energy Investment Group Co., Ltd. to avoid competition with Longyuan Electric Power Group Co., Ltd.” and promote the reduction and resolution of competition in the industry, the National Energy Group plans to begin injecting some new energy assets into the company. The shares of new energy companies that meet the injection conditions in some provincial companies under the National Energy Group are estimated to have an installed capacity of about 4 million kilowatts of new energy. The initial plan is to inject them in batches. During the “14th Five-Year Plan” period, the company aims to add 30 GW of installed wind power, and plans to start production of 7.5 GW and 11.5 GW respectively in 2024-2025. Therefore, Guoneng Group's new energy asset injection will strongly support the achievement of the company's installed capacity goals. It is expected that after the parent company's new energy assets are injected, it will lead to an increase in both the company's profit and valuation.

The market is looking forward to the new electricity reform policy, and the environmental value of green electricity is just around the corner:

Since May of this year, the national policy level has sent positive signals that will focus on solving the problem of new energy consumption. In particular, the State Council issued the “2024-2025 Energy Conservation and Carbon Reduction Action Plan”, which requires that the proportion of non-fossil energy consumption in new high-energy projects should not be less than 20% in the next two years after the “14th Five-Year Plan”, strengthen the link between renewable energy green certificate transactions and energy saving and carbon reduction policies, and achieve full green license issuance coverage by the end of 2024. It is expected that the green electricity trading market will expand rapidly, and that the environmental value of green power is gradually reflected. We believe that the new 10% consumption red line guarantees the bottom line of utilization, will promote the rational development of new installed capacity, and ensure reasonable returns from new energy power generation. Profits in the new energy industry are guaranteed. Coupled with the growth of installed capacity and the gradual increase in dividends, the utility attributes of the industry have increased, and valuations are expected to increase further.

Maintaining a buy rating, target price of HK$10.36:

As a leader in behavior, the company has a significant advantage in resource distribution. The valuation is expected to be superior to the industry average, and it enjoys a certain margin of premium. We have updated the company's target price of HK$10.36, which is equivalent to 9 times and 8 times PE in 2024 and 2025. The target price has room for 48% increase compared to the current price, and the purchase rating is maintained.

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The parent company injects new energy assets in batches, which is beneficial to both increasing the company's profit valuation:

The company announced that it recently received a notice from the controlling shareholder National Energy Group. In order to implement the “Supplementary Letter of Commitment of China Energy Investment Group Co., Ltd. to avoid competition with Longyuan Electric Power Group Co., Ltd.” and promote the reduction and resolution of competition in the industry, the National Energy Group plans to begin injecting some new energy assets into the company. The shares of new energy companies that meet the injection conditions in some provincial companies under the National Energy Group are estimated to have an installed capacity of about 4 million kilowatts of new energy. The initial plan is to inject them in batches. During the “14th Five-Year Plan” period, the company aims to add 30 GW of installed wind power, and plans to start production of 7.5 GW and 11.5 GW respectively in 2024-2025. Therefore, Guoneng Group's new energy asset injection will strongly support the achievement of the company's installed capacity goals. It is expected that after the parent company's new energy assets are injected, it will lead to an increase in both the company's profit and valuation.

The market is looking forward to the new electricity reform policy, and the environmental value of green electricity is just around the corner:

Since May of this year, the national policy level has sent positive signals that will focus on solving the problem of new energy consumption. In particular, the State Council issued the “2024-2025 Energy Conservation and Carbon Reduction Action Plan”, which requires that the proportion of non-fossil energy consumption in new high-energy projects should not be less than 20% in the next two years after the “14th Five-Year Plan”, strengthen the link between renewable energy green certificate transactions and energy saving and carbon reduction policies, and achieve full green license issuance coverage by the end of 2024. It is expected that the green electricity trading market will expand rapidly, and that the environmental value of green power is gradually reflected. We believe that the new 10% consumption red line guarantees the bottom line of utilization, will promote the rational development of new installed capacity, and ensure reasonable returns from new energy power generation. Profits in the new energy industry are guaranteed. Coupled with the growth of installed capacity and the gradual increase in dividends, the utility attributes of the industry have increased, and valuations are expected to increase further.

Maintaining a buy rating, target price of HK$10.36:

As a leader in behavior, the company has a significant advantage in resource distribution. The valuation is expected to be superior to the industry average, and it enjoys a certain margin of premium.

We have updated the company's target price of HK$10.36, which is equivalent to 9 times and 8 times PE in 2024 and 2025. The target price has room for 48% increase from the current price, and maintains the purchase rating.

Risk warning:

The new installed capacity fell short of expectations

Subsidy repayment delays

Electricity price reduction

Increased power limit