\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 985 China National Nuclear Power Co.Ltd(601985) )
Nuclear power: one of the best alternatives to fossil energy
The natural attributes of stable supply, low-carbon and environmental protection of nuclear power make it theoretically one of the high-quality substitutes for fossil energy. From the perspective of practical application, the popularization of nuclear power has also been successfully realized in some developed countries such as the United States and France. In contrast, China National Nuclear Power Co.Ltd(601985) industry started late, developed cautiously and steadily, and still achieved rapid growth in the frequently changing social environment: from 2012 to 2021, China National Nuclear Power Co.Ltd(601985) installed capacity CAGR was 17.40%, and nuclear power generation CAGR was 17.24%, significantly exceeding the growth rate of total installed capacity and total power generation (8.49% / 5.96%). In the long run, China’s nuclear power generation has huge potential to improve, and it is still in the early stage of growth. In 2020, the China National Nuclear Power Co.Ltd(601985) penetration rate is 5%, which is only 10% of the world average, and there is room for doubling.
Industry: multi factor catalysis, development will accelerate
We believe that the nuclear power industry is currently being catalyzed by three important factors and may accelerate its development in the future: ① the third generation nuclear power technology has matured. The economy and practicability of the third generation nuclear power plant have been preliminarily verified; ② The nuclear safety factor has been greatly improved. The core damage frequency of units in the third generation station is more than 100 times lower than that in the second generation station. ③ The “double carbon” goal accelerates China’s energy transformation. At present, thermal power generation still accounts for more than 70% of China’s total power generation. Large scale clean energy substitution of thermal power is one of the important ways for China to achieve the goal of “double carbon”.
China National Nuclear Power Co.Ltd(601985) : nuclear power duopoly, “scenery” is more prosperous
The company is one of the double oligarchs in China National Nuclear Power Co.Ltd(601985) industry, and its layout Windsun Science Technology Co.Ltd(688663) opens up a new growth curve. In terms of nuclear power business, as of December 31, 2021, the company has 24 nuclear power units in operation, with an installed nuclear power capacity of 22.549 million KW and a market share of 42%, second only to CGN; In terms of new energy business, the company has achieved a step-by-step growth in new energy power generation through the acquisition of China Nuclear Huineng. In 2021, the company’s annual new energy power generation totaled 9.514 billion kwh, an increase of 68.69% over the same period last year. The injection of new energy assets will also fully fill the stagnation period of main industry growth caused by the suspension of nuclear power project approval in 20162018.
Social electricity is tight, and the rise of electricity price is expected to fully thicken the company’s performance
We expect that in 2022, the company’s market-oriented power sector will usher in a double rise in volume and price, which will significantly increase the company’s performance: Based on the company’s financial data in 2020, under the assumption that the electricity price increases by 0.1 yuan and the market-oriented power increases by 20 billion kwh, the company’s net profit attributable to the parent is expected to increase by 2.79 billion yuan, and the performance has high upward elasticity.
Profit forecast and Valuation: it is estimated that the operating revenue of China National Nuclear Power Co.Ltd(601985) 20212023 will be 62.367 billion yuan, 74.217 billion yuan and 76.576 billion yuan respectively, the net profit attributable to the parent company will be 8.037 billion yuan, 11.111 billion yuan and 11.931 billion yuan respectively, and the corresponding PE will be 17.09, 13.30 and 12.38 million yuan respectively. For the first time, it will be given a “buy” rating and a comprehensive target price of 11.27 yuan based on the dual perspective of DCF and PE.
Risk warning: nuclear safety accident risk; Risk that the progress of nuclear power projects under construction is less than expected; The risk that the development of new energy business is less than expected; The risk of weak social electricity demand.
