China Three Gorges Renewables (Group) Co.Ltd(600905) (600905)
As the leader of Shanxi Guoxin Energy Corporation Limited(600617) operation, Haifeng has driven the rapid growth of performance in the new year of operation: the company is the main new energy operation and listing platform of the Three Gorges group and the leader of A-share new energy operation. By the first half of 2021, the company’s installed capacity of new energy has reached 16.44gw (including 9.41gw of wind power and 6.8gw of photovoltaic). The company is also one of the most active participants in offshore wind power construction. There are large-scale projects in operation and under construction in Fujian, Guangdong, Jiangsu and other major offshore wind provinces. As of the first half of 2021, the company has put into operation 1.49gw of offshore wind power installed capacity, with a scale of 2.94gw under construction, ranking first in the industry, accounting for about 20% of the scale of offshore wind power under construction in China In the future, according to the “14th five year plan” development plan of the Three Gorges group, the group’s new energy installation target during the “14th five year plan” period is 70-80gw. As the main new energy operation platform of the Three Gorges group, China Three Gorges Renewables (Group) Co.Ltd(600905) has strong certainty of large-scale installed capacity growth in the future, laying a foundation for high performance growth in the future.
The planning is clear, the projects are abundant, and the long-term and short-term logic is both: in the long run, according to the information of the public performance exchange meeting in the third quarterly report of the company, the company plans to increase the installed capacity of new energy by more than 5GW per year during the 14th five year plan period. Compared with the current transportation and installation capacity of the company, the company has high growth. In the short term, the company’s planning objectives are highly achievable. Taking the cash flow of construction in progress and investment activities as the measurement index, the company’s construction in progress reached 31.23 billion yuan and 34.39 billion yuan respectively by the end of 2020 and the first half of 2021, with a year-on-year increase of 184.2% and 154.6% respectively. All of them are new energy construction in progress. The significant growth of construction in progress highlights the company’s short-term installed capacity and production capacity. Meanwhile, according to the disclosure in the interim report, the installed capacity of the company’s new energy projects under construction has reached 5.22gw, including 4.5gw of wind power and 0.72gw of photovoltaic power. Most of the company’s projects under construction this year are offshore wind power projects. As this year is the last year before the cancellation of offshore wind power subsidies, most of the company’s offshore wind power projects are in the rush installation period. It is expected that large-scale offshore wind power projects will be put into operation before the end of the year, and the company’s offshore wind power installation model is expected to usher in a big step. Referring to the company’s “14th five year plan” for installation, we expect that the company’s short-term new energy production progress is expected to exceed expectations. From the perspective of cash flow from investment activities, the company’s net cash flow from investment activities has increased significantly since 2020, reaching a net outflow of 23.28 billion yuan by the end of the third quarter of 2021. From the above two aspects, the company’s short-term performance is highly deterministic, and 2022 is expected to benefit from the high growth of the full capacity power generation performance of the projects put into operation this year.
The promotion of energy consumption dual control superimposed power reform policy is expected to benefit from the growth of green power demand: green power trading provides a market-oriented trading platform for wind power photovoltaic. Affected by energy consumption dual control in the second half of this year, green power trading demand is strong, and the premium of the first batch of green power trading is about 0.03-0.05 yuan / kWh. At the same time, against the background of rising coal prices, the national development and Reform Commission issued the notice on further deepening the market-oriented reform of on grid electricity price of coal-fired power generation in October. The floating range of on grid electricity price of coal power expanded by 20% from top to bottom, and the electricity price of high energy consuming industries was not limited. The sharp rise of market-oriented electricity price of coal power is expected to further promote the demand for green power trading and further increase the premium of green power trading. As the leader of Shanxi Guoxin Energy Corporation Limited(600617) operation, the company is expected to fully benefit from green power trading in the future with the continuous operation of parity projects.
The issuance of equity incentive policy further stimulates the growth momentum of the company: the company issued the first phase of stock option incentive plan at the end of November, and the restricted shares to be granted to the directors, management and technical backbone of the company shall not exceed 60.9 million shares, accounting for about 0.213% of the total share capital. The lifting of the restricted shares is linked to the important performance indicators in the next three years. The company’s assessment indicators are mainly roe, compound growth rate of operating revenue and economic added value. From 2022 to 2024, roe is required to be no less than 7.73%, 7.8% and 8.0% respectively, and the compound growth rate of operating revenue is required to be no less than 15%, 16.5% and 18% respectively. From the assessment indicators set in the future, the assessment requirements of the company will increase year by year in the next three years, demonstrating the company’s confidence in future installed capacity growth and profitability improvement.
Investment suggestion: in 2021, the company’s offshore wind power projects will be put into centralized operation, resulting in a leap in installed capacity. At the same time, the full power generation of new projects next year is expected to significantly improve the performance. We expect the revenue growth rate of the company from 2021 to 2023 to be 58.1%, 32.9% and 15.2% respectively, and the net profit growth rate to be 39.9%, 54.8% and 11.7% respectively, with outstanding growth; The investment rating of Buy-A is given for the first time, and the six-month target price is 8.5 yuan.
Risk tips: policy promotion is less than expected, project progress is less than expected, and power demand is less than expected
