The national grid makes every effort to develop the distributed photovoltaic market. According to the International Energy Research Center, State Grid issued a notice on actively striving for the pilot development of distributed photovoltaic on the roof of the whole county (city and district), proposing that "in order to implement the requirements of the National Energy Administration and make every effort to open up the distributed photovoltaic market, the Marketing Department decided to organize all units to actively carry out the pilot application work", requiring "the State Grid Comprehensive Energy Service Group to implement the investment funds for follow-up projects in advance according to the results of resource inspection." We believe that after Xin Baoan, the new chairman of the State Grid (January 2021), officially took office, the State Grid released the "carbon Peak, carbon Neutralization" action plan in March, this time to develop the distributed photovoltaic market, the direction of energy saving and emission reduction of the national grid is gradually clear, and the comprehensive energy of the national network is expected to become the main investor of distributed photovoltaic. Compared with the listed Southern Grid Energy, contract energy management is its main source of revenue, of which the contribution of distributed photovoltaic to total revenue increased by 4pct to 36% in 2019 compared with 2018. We believe that the State Grid Comprehensive Energy is expected to promote the development of the South Grid Energy as a template, and the company, as a listed platform for power distribution and energy conservation under the State Grid Comprehensive Energy, is expected to benefit in the long run.
Reorganize 27 provincial companies to promote high-quality development. According to the announcement of Bond 19 Energy Conservation 01 on April 30, 2021, the national network will reorganize the assets of 27 provincial integrated energy service companies and consolidate them by the end of 2020. We believe that this move is expected to promote the high-quality development of the integrated energy service business of the national network.
It is proposed to inject energy-saving assets into the distribution network, and the energy-saving business will continue to expand. 2020.8.14 the company announced the non-public stock offering plan for 2020, which intends to raise no more than 1.88 billion yuan, which is mainly used to acquire energy-saving assets of distribution network and related EMC contract rights and obligations of provincial comprehensive energy service companies under the jurisdiction of State Grid.
Among them, a total of 9 energy-saving assets are injected, with a valuation of 1.322 billion yuan, and a simulated net profit of 107 million yuan in 2019, corresponding to a 12-fold valuation of PE. 2021.3.30 the fixed increase of the company announcement has been examined and approved by the Securities and Futures Regulatory Commission. According to the company's 2020 annual report, the asset delivery of the assets to be acquired has been completed by the end of 2020.
The energy-saving business of the national network is expected to grow. The State Grid sold more than 4 trillion kilowatt hours of electricity in 2019, and its line loss rate is about 6%, that is, the annual power loss is more than 2400 billion kWh. According to the experience summary in the company's 2016 acquisition report: the medium and low distribution networks account for 50% of the network loss, and the energy saving of the distribution network can save 30% of the line loss, then the energy saving transformation of the distribution network under the State Grid can save 36 billion kWh / year. Considering that part of the distribution network has been transformed and may transform itself in the future, we conservatively assume that 30% of the distribution network in the national network area will be transformed by Fuling Power, that is, a power saving space of 108-180 billion kWh / year. The energy-saving business of Fuling Electric Power Distribution Network saves about 2.3 billion kilowatt-hours in 2019, and the total annual power saving of Shandong and Gansu projects that the contract expires is 280 million kilowatt-hours, then the remaining incremental market is 82-15.4 billion kilowatt-hours per year, which is 3.6-6.7 times more than that of Fuling Electric Power in 2019.
Profit forecast and valuation. We estimate that the company will achieve a net profit of 4.69,5.15 and 550 million yuan in 2021-23, with a corresponding EPS of 0.76,0.84,0.89 yuan per share. With reference to the valuation of the comparable company and considering the unique advantages of the company as the only power distribution and energy-saving business platform under the State Grid, the company is given 25-30 times PE in 2021, corresponding to a reasonable value range of 19-22.8 yuan per share, which is superior to the market rating.
Risk hint. (1) with the intensification of competition, the rate of return of distribution network is likely to decline. (2) the spontaneous electricity fluctuates greatly. (3) the occupancy rate of enterprises in Liangjiang New area is lower than expected.