China Energy Engineering Corporation Limited(601868) (601868)
China Energy Engineering Corporation Limited(601868) the actual controller is SASAC, which is the leader of China’s energy construction. As the company’s core business (covering the fields of energy and electricity, water conservancy and municipal engineering, which accounts for about 75% of the company’s total revenue in recent years), engineering construction is the absolute leader of China’s thermal power construction, the construction share of large hydropower projects exceeds 50%, the leader of conventional island construction and the Chinese share of new energy construction exceeds 20%. At the same time, the business boundary continues to be widened. The company attaches strategic importance to the layout of low-carbon energy industry, including vigorously promoting the investment layout of new energy power assets and entering energy storage / hydrogen energy. The prospect of transformation and upgrading is worth looking forward to.
Plan to lead, promote low-carbon transformation, and seize new energy investment & construction opportunities
The Power Planning Institute under energy construction group is the “national team” of China’s power planning industry and positioned as China’s “energy think tank / national think tank”. Its planning leading role in the development of the group deserves attention. On June 21, energy construction group issued the action plan for implementing the “30.60” strategic objectives of carbon peak, carbon neutralization (white paper), which defined ten low-carbon transformation initiatives ( China Energy Engineering Corporation Limited(601868) is the main carrier for implementation and promotion), including vigorously distributing new energy assets, The target is to hold more than 20GW of new energy installed capacity in 25 years (by the end of 20fy, the company holds 2.87gw of installed assets, including 0.78gw of hydropower and 1.40gw of new energy), which is about 14 times the scale of 20fy; At the same time, it has stepped up its entry into strategic emerging industries such as energy storage and hydrogen energy. Recently, it has been noted that the company has made certain layout actions, such as signing a strategic cooperation agreement with Contemporary Amperex Technology Co.Limited(300750) on 21 / 06, focusing on energy storage and other key cooperation; 21 / 11 the company announced that it plans to invest 5 billion yuan to establish China energy construction Hydrogen Energy Development Co., Ltd. Relying on the company’s good advantages in power engineering and other fields and the practice accumulation in promoting low-carbon transformation of energy and power in the early stage, we are optimistic about the prospect of low-carbon transformation of the company.
Pumped storage construction or speed up, or contribute considerable increment to the company’s engineering business
Under the background of energy structure adjustment, the development of pumped storage is facing important opportunities. The National Energy Administration issued the medium and long term development plan for pumped storage (2021-2035) in August 21, which clearly puts forward that the total scale of pumped storage in China will be more than 62gw in 2025 (more than 92% higher than the scale at the end of 20fy), and about 120gw in 2035 (277% higher than the scale at the end of 20fy and about 14% CAGR in 20-30 years), We note that the pace of promoting the signing of pumped storage contracts has begun to accelerate in the past 21 years, and the investors tend to be diversified. We estimate that the average annual investment of pumped storage in the 14th and 15th five-year plans is 86.1 billion and 172.5 billion respectively, of which the average annual investment used to pay for engineering service projects is 34.4 billion and 69 billion respectively. As the backbone enterprise of China’s Pumped Storage Engineering, under the background of rapid market expansion, we believe that the company will usher in the opportunity to increase its share or contribute considerable increment to the company’s engineering construction business (if the pumping and storage construction share of the 14th five year plan company is increased to 30%, the pumping and storage engineering business may contribute 10.3 billion annual revenue to the company, accounting for about 5% of the company’s engineering construction revenue).
The segment valuation gives a 22-year target market value of 141.5 billion, covering the “buy” rating for the first time
We estimate that the company’s net profit attributable to the parent company in 21-23 years will be 6.5/93/10.9 billion respectively (Note: the minority shareholders’ equity of the original Gezhouba in 21q4 will no longer be affected), and yoy will be 40% / 42% / 17% respectively (of which the net profit attributable to the parent company in 21-23 years is expected to be 760 / 10.1 / 1.31 billion). Using the segment valuation method, the project and other businesses have excellent growth prospects and benefit from the acceleration of pumped storage construction. The 22-year 14x target PE is recognized and the corresponding target market value is 116.4 billion; The growth elasticity of power investment and operation is excellent and the space for structural optimization is large. It is recognized to give the 22-year 25X target PE, corresponding to the target market value of 25.2 billion. The company’s 22-year target market value is 141.5 billion, corresponding to the company’s 22-year pe1.5 billion 2X, the target price is 3.39 yuan, covered for the first time, and given a “buy” rating.
Risk warning: the company’s strategy implementation effect is lower than expected, power and infrastructure investment is weaker than expected, impairment risk and policy risk
