\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 985 China National Nuclear Power Co.Ltd(601985) )
One of China’s large-scale nuclear power operators, nuclear power + new energy two wheel drive China National Nuclear Power Co.Ltd(601985) is one of the major nuclear power operators in China. In 2021, the company’s nuclear power revenue accounted for 93.6% of the total revenue. At the end of 2021, the installed capacity of nuclear power in operation was 22.55gw, accounting for 42% of the installed capacity in China. In 2020, the company became the new energy industry platform of CNNC group after acquiring CNNC Huineng under CNNC group; By the end of 2021, the installed capacity of Fengguang has reached 8.87gw, accounting for 28.2% of the company’s total installed capacity (only 0.9% in 2018); In 2020, the revenue will be 3.089 billion yuan, accounting for 5.9% of the total revenue.
Nuclear power: both volume and price rise, and it is expected to enter a stable operation period from 2025
I. capacity: the company may add 10.9 billion kwh of on grid power in 2022. Nuclear power is a high-quality base load energy. In 2021, China’s government work report proposed to “actively and orderly develop nuclear power”, and the nuclear power industry entered a new period of development. According to our calculation, China may approve 7-8 units per year from 2022 to 2025. In the short term, since 2021, the company has added three nuclear power units connected to the grid. According to our calculation, the company may add 10.9 billion kwh of on grid power in 2022, with a year-on-year increase of 6.7%; It is estimated that the company’s nuclear power installed capacity will reach 26gw by the end of 2025, an increase of 15% over 2021. Medium term: from 2025, the nuclear power unit will enter the stable operation period. If the current units under construction of the company are planned to be completed, the company will add 8.77gw of installed capacity by the end of 2028, and the on grid power of nuclear power CAGR 7 = 4.9%.
\u3000\u3000II. Price: the increase of market-oriented transaction price may increase the net profit of 1.5-2.8 billion in the whole year. With the deepening of power market reform, the floating range of coal-fired electricity price has been expanded to 20%, while nuclear power can also participate in market-oriented transactions and enjoy the dividends of electricity price reform. According to our calculation, when the market-oriented transaction price increases by 5%, 10% and 15% respectively in the whole year, the annual profits of the company’s nuclear power business may increase by 1.56 billion yuan, 2.19 billion yuan and 2.82 billion yuan.
Scenery: take over and inject long-term growth power. In the context of dual carbon, the wind power and photovoltaic industries have ushered in historic development opportunities. After the company acquired CNNC Huineng in 2020 and became the new energy industry platform of CNNC group, the new energy business ushered in leapfrog development. By the end of 2021, the company’s total installed capacity had reached 8.87gw, 54 times that of 2018. According to our calculation, by the end of 2025, the company’s installed capacity in operation may reach 30GW, so 21gw of grid connection will be added from 2022 to 2025, with an average annual increase of 5.2gw. According to the company’s installed capacity plan, we expect that in 2025, the company’s new energy business will realize a revenue of 15.2 billion yuan, CAGR 5 = 37.6%, accounting for 24.4% of the company’s total revenue in 2021.
Investment suggestion: China National Nuclear Power Co.Ltd(601985) is one of China’s large-scale nuclear power operators. Under the background of rising electricity price, the company’s nuclear power business is expected to increase both volume and price in 2022; As the only new energy industry platform of CNNC, the cumulative installed capacity of Fengguang from 2022 to 2025 is expected to reach 21gw, which is expected to take over nuclear power and become a new growth point of the company during the 14th Five Year Plan period. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 8.037 billion, RMB 11.072 billion and RMB 11.783 billion respectively, and the corresponding PE will be 17.29, 12.55 and 11.79 times respectively. For the first time, give a “buy” rating.
Risk warning: electricity price decline; The progress of nuclear power construction is less than expected; Risk of policy change; The installed capacity of Fengguang is less than expected; The calculation is subjective and for reference only.
