\u3000\u3000 Jiangsu New Energy Development Co.Ltd(603693) (603693)
In 2021, the provision for impairment of biomass power generation will continue to be 218 million yuan, and the net profit attributable to the parent company is expected to be reduced by 189 million yuan. Following the provision for impairment of RMB 288 million in 2020, the company’s biomass power generation sector continued to make provision for impairment of RMB 218 million in 2021. The provision was originally due to the fact that biomass power generation projects will no longer enjoy the central financial subsidy funds after the reasonable utilization hours of biomass power generation projects are used up, and it is difficult to obtain income through green card trading to replace financial subsidies. On the other hand, the price of biomass fuel continues to rise, the difficulty of acquisition increases and the quality declines. On the whole, after the electricity price subsidy is completed, the on grid electricity price income of the company’s biomass power generation project is not enough to cover the fuel cost, and its continuous operation is no longer of economic value. The company plans to shut down the biomass power generation project after the reasonable utilization hours are used up.
The company expects to realize a net profit attributable to the parent company of 309 million yuan in 2021, with a year-on-year increase of 101%. The main reason for the company’s performance growth in 2021 is that wind power, especially offshore wind power, as the company’s core business, began to release performance. On the one hand, the situation of wind resources in Jiangsu in 2021 was better than that in the same period of last year, and the utilization hours of the company’s wind power projects increased year-on-year; On the other hand, with Xinyang and Huai’an onshore wind power projects put into operation at the end of 2020, the delivery of 40% equity of Datang Guoxin Binhai offshore wind power Co., Ltd. was completed in November 2021. At the beginning of December 2021, Rudong h2# offshore wind power project was fully connected to the grid, and the company’s wind power installed capacity increased year-on-year. Therefore, the company’s wind power business performance increased significantly year-on-year. In addition, the company started its new energy business in December: 1) the controlling shareholder Guoxin group changed its commitment to avoid horizontal competition in December, and the consortium led by Guoxin group won the bid for Dafeng 850000 kW offshore wind power project at the end of January; 2) In December, the company successively established Haoyang new energy and Sujin Shuozhou new energy, and acquired 80% equity of Meiliang photovoltaic power in Anyang County. We believe that after the shutdown of biomass power generation business, the company will pack light and fully carry out wind and new energy business, in which offshore wind power will become the focus of development.
Profit forecast. It is estimated that the company will achieve revenue of RMB 1.743/2.654/3.168 billion in 2021 / 2022 / 2023, net profit attributable to the parent company will be RMB 309/841/881 million respectively, corresponding EPS will be RMB 0.451/1.226/1.285 respectively, and corresponding PE will be RMB 49.78/18.29/17.46 respectively. Considering the small installed capacity base of the company, combined with the plans of comparable companies and the new energy development plan of Jiangsu Province during the 14th Five Year Plan period, we believe that the growth space of new energy during the 14th Five Year Plan period is huge. We give the company 25-30 times PE in 2022, with the corresponding share price of 30.65-36.78 yuan, maintaining the “recommended” rating of the company.
Risk tip: the installed growth rate of new energy is lower than expected, and the power consumption is lower than expected.
