\u3000\u3000 China Three Gorges Renewables (Group) Co.Ltd(600905) (600905)
Event:
China Three Gorges Renewables (Group) Co.Ltd(600905) released the performance forecast for 2021: in 2021, the company realized a net profit attributable to the parent company of 5.571-5.831 billion yuan (median 5.701 billion yuan), a year-on-year increase of 54.28% – 61.48% (median 57.88%); The net profit attributable to the parent company after deduction was RMB 5.102-5.332 billion (median value: RMB 5.217 billion), with a year-on-year increase of 46.53% – 53.14% (median value: 49.83%).
Key investment points:
The growth of power generation revenue + investment income increased significantly, and the net profit attributable to the parent company doubled in 2021q4.
1) the increase of power generation income + the significant increase of investment income has doubled the net profit attributable to the parent company in 2021q4. In 2021q4, the net profit attributable to the parent company was 1.573-1.833 billion yuan (median 1.703 billion yuan), with a year-on-year increase of 96.62% – 129.12% (median 112.87%). First, the total power generation increased by 37.69% year-on-year; second, the increase in investment income significantly increased the non recurring profit and loss to 496-526 million yuan (2020q4 was – 19 million yuan); The net profit attributable to the parent company after deduction was 1.077-1.307 billion yuan (median 1.192 billion yuan), with a year-on-year increase of 31.46% – 59.55% (median 45.51%), which was lower than the growth rate of net profit attributable to the parent company.
2) for the whole year of 2021, the company expects to realize a net profit attributable to the parent company of 5.701 billion yuan (median), with a year-on-year increase of 57.88% (median). First, the company’s new projects have been put into operation for power generation, and the total installed capacity has increased compared with the same period of last year, with a year-on-year increase of 42.52%, Second, the non recurring profit and loss driven by investment income increased significantly by 355 million yuan to 484 million yuan (median).
Projects under construction are put into operation to ensure high growth performance in 2022, and the Group continues to make efforts to ensure long-term performance
1) in the short term, the installed capacity of new energy will increase rapidly to ensure the high growth performance in 2022. According to the news on the company’s official website in December 2021, a total of 2.8gw of the company’s Guangdong Yangjiang Shaba and Jiangsu Rudong projects have been connected to the grid with full capacity, and the installed capacity of the company’s Haifeng has increased rapidly. From the perspective of projects under construction, by the end of June 2021, the total installed capacity of projects under construction of the company was 5.23gw. Among them, wind power is 4.5gw and photovoltaic power is 7.22gw. According to Polaris wind power network, the Three Gorges group is expected to start the construction of about 4gw offshore wind power project in Yangjiang, Guangdong in 2022, and 3gw has been started in January. By the end of 2021, the new full capacity consolidated projects are superimposed, and the projects under construction are gradually put into operation in 2021. The company’s performance is expected to maintain high growth in 2022.
2) in the medium and long term, the company, as the main body of the new energy business of the Three Gorges group, has strong certainty in improving the installed capacity during the 14th five year plan. The Three Gorges group plans to achieve the goal of 70-80gw of new energy installed capacity in the 14th five year plan. As the main implementation body of its new energy business strategy, the company is expected to accelerate the growth of installed capacity and help the rapid improvement of performance. The company has obvious first mover advantages in sea breeze. By the end of June 2021, the scale of sea breeze has been put into operation, with a scale of 1.49gw and a scale of 2.94gw under construction, ranking first in the industry, accounting for about 20% of the scale of sea breeze under construction in China. The pattern of centralized and continuous large-scale development has taken shape.
Profit forecast and investment rating
China Three Gorges Renewables (Group) Co.Ltd(600905) is the first tier enterprise in Shanxi Guoxin Energy Corporation Limited(600617) operation. Backed by the Three Gorges group, the installed scale of new energy is expected to continue to increase, and the performance of the 14th five year plan is highly uncertain. The continuous operation of short-term projects under construction ensures the high growth performance in 2022. In the medium and long term, the company is the main body of the new energy business of the Three Gorges group, and there is strong certainty in the improvement of the installed capacity during the 14th five year plan. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 5.593/81.09/10.687 billion respectively, with a growth rate of 55% / 45% / 32% respectively, and the corresponding PE will be 34.38x/23.71x/17.99x respectively. It will be covered for the first time and given a “buy” rating.
Risk tips
Policy promotion is less than expected; The pace of subsidy payment has slowed down significantly; The technological progress of the industry has slowed down; Industry competition intensifies; The risk that the company’s development projects fail to meet the expectations, etc.
