Key points of investment

Natural gas sales increased but the number of hours wind farms could be used decreased. 2024H1's net profit was 1.43 billion yuan 2024H1, and the company achieved operating income of 12.137 billion yuan, an increase of 20.80% over the previous year; net profit to mother was 1.43 billion yuan, down 0.62% year on year. With 2024Q2, the company achieved operating income of 4.23 billion yuan, a year-on-year increase of 21.26%; net profit to mother was 0.598 billion yuan, a year-on-year decrease of 0.25%.

Natural gas: Gas sales increased sharply year on year. Key LNG and pipeline projects are progressing steadily in 2024H1. The company's gas sales volume is 3.017 billion square meters, an increase of 46.50% year on year. Relying on new pipelines, the company is vigorously developing natural gas end users. By mid-2024, it had a total of 0.6658 million users. The company continues to improve the gas pipeline network, operating a total of 9803.86 kilometers of pipelines, and has operated a total of 1 LNG receiving station, 5 CNG parent stations, 3 CNG sub-stations, 3 LNG filling stations, and 1 L-CNG joint construction station. 2024H1, the Zhuozhou-Yongqing gas pipeline project, the Eancang-Beijing-Shihan pipeline project, the “Beijing-Shihan” gas pipeline double line project pipeline, and the first phase of the Beijing-Han Line LNG gas storage and peak shifting station project were put into trial operation.

Wind power: The construction of the wind farm project progressed steadily, and the approved wind power project increased significantly by 2024H1. The company added 64.5 MW of wind power holding installed capacity and 64.5 MW of managed installed capacity. The cumulative holding installed capacity was 6.36 GW, and the cumulative managed installed capacity was 6.62 GW. As of mid-2024, the company's wind power projects under construction have a construction capacity of 610 MW. 2024H1, the average number of hours used by the wind farm controlled by the company was 1,212 hours, and the wind power generation capacity reached 7.444 billion kilowatt-hours. The company is actively expanding its wind resource reserves, adding 1.65 GW of approved wind power projects in 2024H1, with a total approved capacity of 4.51 GW of unstarted projects; 500 MW wind power construction targets have been added, and the total wind power target capacity has reached 11.24 GW.

Optical storage: The pumped energy storage project in Fengning, Hebei progressed smoothly. New energy storage projects within and outside the province were invested in 2024H1. The company has effectively registered a total capacity of 130 MW of unstarted photovoltaic projects; 700 MW of PV agreement capacity was added, and the cumulative effective PV agreement capacity was 11.66 GW. As of mid-2024, a total of 126.12 MW photovoltaic power generation projects have been operated, with a cumulative management installed capacity of 342.12 MW. In the field of energy storage, the company invested in the construction of a pumped storage power plant project in Fengning, Hebei. The power plant is designed with a total installed capacity of 3.6 GW and undertakes pumped energy storage functions such as peak shifting and valley filling in the power system. As of mid-2024, units 1-10 of the Hebei Fengning Pumped Storage Power Plant Project were operating normally, unit 11 was partially commissioned, and the entire unit 12 was commissioned. In 2024 H1, the company added the 400mW/1600MWh compressed air energy storage power plant index.

Profit forecasting and valuation

Maintain profit forecasts and maintain an “gain” rating. The company is a clean energy and gas leader in Hebei Province, actively promoting the construction of LNG projects. We maintain our profit forecast for 2024-2026. The company's net profit for 2024-2026 is 2.763, 3.274, and 3.819 billion yuan, respectively, and the corresponding EPS is 0.66, 0.78, and 0.91 yuan, respectively; the corresponding PE is 10, 9, and 7 times, respectively.

Risk warning: Project construction falls short of expectations; policy support falls short of expectations; product prices fluctuate.