Key investment points
The performance of raw material cost suppression: since the beginning of 2021, the three industries of public utilities, environmental protection and power grid equipment have increased by 39%, 29% and 55%. In terms of valuation, P / e22x of public utilities hit a new high since 2q2019; Environmental protection p / e18x, near the bottom of history; Power grid equipment P / e30x is located in the 5-year mean interval. During the 14th Five Year Plan period, focusing on the construction of new power system, we are optimistic about the broad investment opportunities at the load end of source network.
The project construction is in full swing, and the transformation of green power is irreversible: after 2015, the growth rate of power consumption in the secondary industry converges, and China’s power consumption growth center moves down to 5%. Superimposed on energy consumption control, the average utilization hours of thermal power equipment are light and stable at 4200h. Coal prices soared this year, leading to difficulties in thermal power operation. In August, the gross profit margin of thermal power enterprises fell to a nine-year low of 7.5%. More and more traditional power enterprises are transforming to green power. The gross profit margin of wind power and photovoltaic projects is more than 50%, which is much higher than the profit level of traditional thermal power by 15%. With the increase of the proportion of new energy business, the overall roe of the enterprise is further increased and finally reflected in the company’s valuation. We estimate that the new installed capacity CAGR of distributed / centralized photovoltaic in the 14th five year plan is as high as 57% / 33% respectively, and the business opportunities at the project operation end are booming.
Pumped storage has entered a golden decade: as the most economical new energy consumption scheme, pumped storage accounts for 90% of China’s installed energy storage capacity. In 2020, pumped storage accounted for only 1.4% of China’s total power installed capacity, which was lower than the international average of 5%. With the implementation of two important documents this year, the biggest problem perplexing the industry has been solved. According to the plan, during the period from the 13th five year plan to the 16th five year plan, the growth rate of new installed capacity of pumping and storage will be rapidly increased from 1% to 536%, 90% and 210%; The investment scale will surge from 24 billion yuan to 1831 / 406 / 1260 billion yuan, and the industry will enter the golden decade.
From energy efficiency management to demand side response, new business forms and new blue ocean: the management mode of dual control of energy consumption makes energy efficiency management the rigid demand of industrial and commercial enterprises and public buildings, and promotes the penetration of energy efficiency management infrastructure. In the future, the energy management system will no longer be a simple power consumer, but will cooperate with flexible loads such as distributed photovoltaic and electric vehicles, participate in the integration and interaction of local distribution networks, and provide demand side response services for the power system. At present, there are three main types of demand response: non productive load of industrial users, air conditioning load of commercial and public buildings, and orderly charging load of electric vehicles. It is conservatively estimated that China’s flexible load resources are more than 50 million kilowatts.
Investment suggestions: 1) green power operators: it is recommended to pay attention to Jilin Electric Power Co.Ltd(000875) with the highest proportion of new energy in the transformation of traditional thermal power, and China Three Gorges Renewables (Group) Co.Ltd(600905) , the first tier of scenery new energy operators backed by the Three Gorges group. Recommend the advantages of distributed roof photovoltaic investment, construction and operation integration of central enterprises China Southern Power Grid Energy Efficiency&Clean Energy Co.Ltd(003035) . 2) Pumped storage: it is suggested to pay attention to the Yunnan Wenshan Electric Power Co.Ltd(600995) proposed to be placed into the 100% equity of China Southern grid peak shaving and frequency modulation company to transform pumped storage, peak shaving hydropower and power grid energy storage; State Grid pumped storage subsidiary and State Grid Xinyuan (unlisted), the largest investor and operator of pumped storage in China. 3) energy efficiency management: it is recommended to pay attention to the supplier of intelligent microgrid and enterprise energy efficiency management solution Acrel Co.Ltd(300286) ; the supplier of electric power EPCO integrated solution Suwen Electric Energy Technology Co.Ltd(300982) ; and the supplier of intelligent monitoring solution for deep ploughing power grid equipment Hangzhou Kelin Electric Co.Ltd(688611) .
Risk warning: the power grid investment is less than the expected risk; Macroeconomic downside risk; The promotion speed of power reform is lower than the expected risk.