Industry: high prosperity + good competition pattern + strong profitability. It is more suitable to use the valuation method of growth stocks at different stages. 1) With high prosperity, Xi Jinping the president’s public commitment at the climate ambition summit is more similar to 1200gw, so it is a lower limit target, and the real installed capacity will be significantly exceeded. 2) The competition pattern is good. Vertically, the industry experiences concentration dispersion re concentration. Horizontally, the market concentration of the wind farm industry is high. In 2020, the Cr4 (caliber of transportation and installation capacity) of the wind farm operation market is more than 50%, while CR8 is more than 75%. 3) In recent years, it is imperative to develop from large-scale, light-weight and low-cost wind power transmission to offshore wind power transmission, and then to strong profitability. Therefore, as a stable operating asset with a duration of 20-30 years, green power operation is more suitable to adopt DCF valuation method from the perspective of the whole life cycle. However, in the next 5-10 years (to 2030), it belongs to a very clear growth stage. At this stage, we think it is more suitable to adopt peg valuation method, which is 30 times that of the industry center.
Barriers: the ability to obtain front-end resources is the core barrier, which provides an important guarantee for the efficiency of back-end operation and management. Under the dual carbon target, large energy enterprises will focus on entering the field of green power operation, and the green power operation projects will reflect two changes: 1) the increasingly fierce competition will gradually reduce the rate of return of the project; 2) Incremental high-quality projects will become more and more scarce. Therefore, for energy enterprises, the ability to obtain high-quality resources has become the core barrier of green power operation industry. At the project level, the Three Gorges group and Huaneng Group signed strategic cooperation framework agreements with several provinces respectively; At the capital level, large energy enterprises have stronger capital strength and lower financing cost. In addition to resource acquisition capability, operation and management efficiency is also the core barrier, because the efficiency of the same assets will be different under different technologies, teams and management modes.
Target: large state-owned energy enterprises have more competitive advantages. It is recommended to China Three Gorges Renewables (Group) Co.Ltd(600905) and pay attention to Huaneng Power International Inc(600011) and Longyuan Power. 1) China Three Gorges Renewables (Group) Co.Ltd(600905) : backed by the platform of the Three Gorges group, the project has strong ability to obtain resources; Low asset liability ratio, high credit rating and low financing cost; Strong technical strength and share participation to open up the upstream and downstream of the industrial chain; With obvious first mover advantage and strategic vision, we plan offshore wind power in advance. We expect that the company’s EPS will be 0.15, 0.19 and 0.23 yuan respectively from 2021 to 2023, and the corresponding PE will be 45, 35 and 29 times respectively (corresponding to the closing price of 2022.1.27). 2) Huaneng Power International Inc(600011) : from 2018 to 2020, the net profit attributable to the parent company was RMB 1439 million, RMB 1686 million and RMB 4565 million respectively, and the operating net cash flow was RMB 28892 million, RMB 37.324 billion and RMB 42.050 billion respectively. The cash flow situation was stable; It can be seen from the capital expenditure that the existing thermal power assets of the company will eventually be converted into new energy assets in the form of depreciation in the future. Therefore, if the perspective is long enough, the reasonable value of thermal power assets should be the same as that of Longyuan Power, and the value is seriously underestimated. 3) Longyuan Power: the world’s largest wind power operator, with a global strategic vision, actively explore overseas markets and successfully realize the “going global” of wind power.
Risk tip: the macroeconomic downturn weakens the demand for terminal industrial power; The terminal sales electricity price continues to decline under the influence of policies; The progress of power system reform is less than expected; Wind power photovoltaic construction is not up to expectations.
