Main points of investment
Sell CLP Shentou thermal power assets to accelerate the transformation of clean energy:
On November 26, 2021, Shanxi Shentou, a wholly owned subsidiary of the company, sold its 40% stake in CLP Shentou to the newly established Tianjin Dongfu efficiency Investment Management Center (limited partnership) for 206 million yuan. After the completion of the sale, the company no longer has the control of CLP Shentou. CLP Shentou owns two 1200 megawatts of coal-fired generating units in Shanxi province and has been losing money in the past two years.
Through the disposal of thermal power assets, the company will help improve profitability and accelerate the transition to clean energy.
The room for rising electricity prices is gradually opening up, which is good for power generation enterprises:
Since the notice of electricity Price marketization Reform, more than 10 provinces, including Guangdong, Jiangsu and Zhejiang, have made arrangements for electricity market trading next year. At present, the average transaction price of electric power in Jiangsu Province in 2022 is 466.69 yuan / MWh, rising by 18.38%. The average price of bilateral electricity transactions in Guangdong in 2022 was 497.04 yuan / MWh, rising by 10.99%. With the continuous promotion of the market-oriented reform of electricity price and the expansion of the scale of market-oriented electricity transaction, the floating space of electricity price is gradually opened, and power generation enterprises will benefit.
The profit of thermal power is expected to improve in 2022:
In 2022, the price of the long Association of Thermal Coal will be adjusted every month. The benchmark price of launching coal is temporarily signed at 5500 kcal / ton of thermal coal, and the fluctuation range is expanded to 550,850 yuan / ton, which is obviously lower than the price center of 2021. In addition, the scope of the long-term Association has been further expanded, in which the demand side requires power generation and heating enterprises to sign the long-term Association for coal other than imported coal. With the improvement of the coal association mechanism, coal cost fluctuations will be reduced, which is conducive to the company's thermal power sector to turn losses into profits.
Maintain the buy rating with a target price of HK $5.88:
Benefiting from higher market electricity prices and lower unit coal costs, the company's thermal power sector profits are expected to improve in 2022. We updated the company's earnings forecast and gave the company a target price of HK $5.88, equivalent to 23 times PE and 1.4 times PB levels in 2022, with 31% room to rise from the current price and maintain the buy rating.