\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 900 China Yangtze Power Co.Ltd(600900) )
“4”: the core of the Three Gorges, with four power stations in two steps. As the hydropower operation platform of the Three Gorges group, the company is the core engine of its operation and development. The group also continues to inject mature hydropower assets into the company. Before listing in 2003, the company owned only one Gezhouba hydropower station. After listing, it continued to acquire the group’s mature hydropower assets in operation. At present, it has wholly owned four large hydropower stations: Gezhouba, Three Gorges, Xiluodu and Xiangjiaba. Through the acquisition, the company’s installed capacity, power, revenue and profit have achieved two step growth.
“2”: the injection and start-up of the two power stations in Ukraine and Belarus, and the third step is imminent. At the end of 2021, the asset injection of Wudongde and Baihetan power stations in the group started. After completing the injection of Ukraine and Belarus, the company’s installed hydropower capacity in China will increase by 57.6% from 45.5 million kW to 71.7 million KW, and the average annual power generation is expected to increase from about 200 billion kwh to more than 300 billion kwh. The calculation shows that after Ukraine and Belarus enter the stable production period, the annual revenue of Yunchuan hydropower is about 26 billion yuan, the gross profit is about 14.3 billion yuan and the gross profit margin is about 55%. In addition, the upgrading of “joint commissioning of four reservoirs” to “joint commissioning of six reservoirs” may bring about 10 billion kwh of water-saving power generation and nearly 2 billion yuan of net profit to the existing four power stations every year.
“N”: boosted by three factors, the development of new energy is expected to exceed expectations. “3060” double carbon target promotes the company to participate in the development of new energy; Wind and light operations are similar to hydropower, and roe is higher than the company’s current return on investment in peer equity; After entering the era of parity, the value of wind and light assets that are no longer subject to subsidy arrears will be revalued and the investment attraction will be improved. The company’s strong cash flow supports its rapid development in the field of new energy. It is estimated that the installed capacity will reach 18.48-49.80gw by 2025. Combined with the new energy planning objectives of the group and its brother units, it is feasible for the company to achieve 20-30gw of new energy installed capacity in 2025.
Investment suggestion: after completing the asset restructuring, the company’s future business segment can be divided into “4 + 2 + n”, that is, the existing assets including Ge, San, Xi and Xiang hydropower stations, the assets to be injected into Yunchuan hydropower station including Wu and Bai hydropower stations, and the new energy operation business that is expected to develop beyond expectations. Although the issuance plan of this asset injection has not been determined, according to our calculation, the reasonable valuation of “4 + 2” in hydropower sector is expected to reach nearly 700 billion. After “+ n”, the new energy business will have the potential to grow into a “Big Mac” and maintain the “recommended” rating of the company.
Risk tips: 1) fluctuation of water from the Yangtze River; 2) Single power structure; 3) Market consumption affects electricity price; 4) Fiscal and tax policy adjustment; 5) The progress of asset restructuring is less than expected; 6) The development of new energy is less than expected.
