China Three Gorges Renewables (Group) Co.Ltd(600905) (600905)
Conclusions and recommendations:
China Three Gorges Renewables (Group) Co.Ltd(600905) announced that the company will invest in the construction of the Three Gorges Yangjiang Qingzhou No. 5, 6 and 7 offshore wind farm projects. The planned installed capacity of the three projects is 3 million KW, with a total investment of 41.17 billion yuan. The project is expected to be connected to the grid in 2024.
The company is a leading enterprise in new energy operation. Under the goal of “carbon neutralization”, the demand for green power will continue to grow, and the scale of the company as a new energy power supplier will continue to expand. In the fourth quarter, several supporting policies were issued. We believe that the financing cost of subsequent companies will be reduced, and the green power grid connection is expected to be further improved, which is good for the development of the company. In addition, since green power is not included in the energy consumption index, with the deepening of power market-oriented trading, the green power premium space can be expected in the future. We expect the net profits of the company in 2021, 2022 and 2023 to be 5.28 billion yuan, 6.99 billion yuan and 8.31 billion yuan respectively, yoy to be + 46%, + 32.4% and + 18.8% respectively, and EPS to be 0.18 yuan, 0.24 yuan and 0.29 yuan. The current share price corresponds to 39 times, 30 times and 25 times P / E in 2021, 2022 and 2023 respectively. It is recommended to “buy”.
The company overweight large offshore wind power projects: the company announced that it would invest in the construction of the Three Gorges Yangjiang Qingzhou five, six and seven offshore wind farm projects. The planned installed capacity of the three projects is 1 million KW, totaling 3 million KW. After the release of this plan, the company’s planned installed capacity of offshore wind power in Yangjiang has reached 5 million KW, of which 2 million KW will be put into operation. The investment amount of Qingzhou 5, 6 and 7 projects is 14.05 billion yuan, 13.76 billion yuan and 13.36 billion yuan respectively, totaling 41.17 billion yuan. The proportion of project capital is 25%, that is, the company will invest 10.292 billion yuan, and the remaining 30.878 billion yuan will be obtained through financing. The Yangjiang Qingzhou 6 project of the Three Gorges project is planned to be fully connected to the grid in December 2024, while the 5 and 7 projects are planned to be fully connected to the grid in December 2024. High quality wind resources, lower equipment cost and large-scale development advantages will support the profitability of this parity project.
According to the company’s semi annual report, by the end of June 2021, the company has put into operation 9.411 million kw of wind power, including 1.487 million kw of offshore wind power. With the phased operation of Yangjiang project, the company’s offshore wind power installed capacity will increase significantly. As of the semi annual report, the total installed capacity of wind power and photovoltaic power of the company was 16.437 million KW; The company expects that during the “14th five year plan” period, the annual installed capacity of new energy will not be less than 5 million KW, and the growth of power generation of the company is highly uncertain.
The company issued the equity incentive policy: the company issued the draft incentive plan for 2021 and planned to grant restricted shares to no more than 212 incentive objects, with a total of no more than 60.9 million shares, accounting for about 0.213% of the share capital. Incentive objects include directors, senior executives, management, technology and business backbone of the company. The performance conditions for the planned lifting of sales restrictions are that the compound growth rate of operating revenue in 2022, 2023 and 2024 over 2020 is not less than 15%, 16.5% and 18% respectively, and the roe in 2022, 2023 and 2024 is not less than 7.73%, 7.8% and 8.0% respectively. The grant price of the first restricted stock is 3.38 yuan per share. The equity incentive policy is expected to enhance the cohesion of employees and stimulate the enthusiasm of the management team, which is conducive to the sustainable development of the company.
Profit expectation: we expect the net profit of the company in 2021, 2022 and 2023 to be 5.28 billion yuan, 6.99 billion yuan and 8.31 billion yuan respectively, yoy to be + 46%, + 32.4% and + 18.8% respectively, and EPS to be 0.18 yuan, 0.24 yuan and 0.29 yuan. The current share price corresponds to 39 times, 30 times and 25 times P / E in 2021, 2022 and 2023 respectively. It is recommended to “buy”.
