Jinko Power Technology Co.Ltd(601778) (601778)
Company: private photovoltaic power station leader, business inflection point is now
The company focuses on the photovoltaic power station operation + EPC business segment, and its performance fluctuates in recent years. The revenue / net profit in 2020 is RMB 3.59/480 billion respectively, cagr2 = – 29% / – 27%. With the proposal of the double carbon target in 2020, the company increased the development of distributed photovoltaic, and the photovoltaic EPC business revenue of 2021h1 company increased by + 33% year-on-year, restoring the growth trend and promoting the company’s revenue to return to the growth channel.
Industry: the volume of photovoltaic industry is imminent. It is estimated that China’s cumulative installed capacity will exceed 650gw in 2025
Cost reduction and efficiency increase in the photovoltaic industry have been continuously promoted, and nearly 80% of China’s regions have been able to achieve parity economy. Carbon neutralization is accelerated. We predict that the cumulative installed capacity of photovoltaic in China is expected to exceed 650gw in 2025, cagr5 = 20.73%. It is expected that China will add nearly 80gw of photovoltaic installed capacity every year during the 14th five year plan.
In 2021m6, the whole county promoted the implementation of policies to promote the integration of the distributed photovoltaic market. Central state-owned enterprises entered the distributed photovoltaic market with low-cost funds and massive resources to accelerate the release of market demand. We calculated that the national roof distributed photovoltaic installation scale space exceeded 850gw. In addition, under the new joint investment mode of “central state-owned enterprises + private enterprises”, the construction process of distributed photovoltaic is expected to accelerate.
The loose price of 2021m12 silicon material has driven the price of components down to 1.85-1.90 yuan / W. We expect that the component price of 1.8 yuan / w will be the critical point of large-scale demand, corresponding to the system cost of ground power station of 4.1 yuan / W, which can achieve a yield of 6% in areas with utilization hours exceeding 1300.
Highlights: the structure of self-sustaining power stations is adjusted and the income quality is optimized, and the photovoltaic EPC business is expected to rise in the wind
Power station operation (ballast stone business): ① the company’s power station operation performance is stable, and the revenue is stable at about 3 billion yuan from 2018 to 2020. As of 2021q3, the scale of the company’s own power station has reached 2.88gw. ② The power station structure adjustment optimizes the income quality. The company has sold the 1.2gw stock subsidy project and incorporated it into the parity project to continuously optimize the quality of assets and cash flow.
EPC business (growth business): ① affected by 531 policy and epidemic situation, the company took the initiative to adjust photovoltaic EPC business, resulting in a decline in performance in recent two years. ② The company has rich engineering experience and has accumulated more than 3gw power station engineering experience. Under the background of promoting the whole county, the company actively promotes the signing of the cooperation agreement of the whole county, and the EPC business resource reserve is sufficient, which is expected to be large-scale in 2022-2023.
Operation and maintenance (reserve business): with the growth of installed capacity of photovoltaic industry, the operation and maintenance market has broad prospects. We expect the market demand to exceed 30 billion yuan in 2025. The company has rich experience in operation and maintenance, the scale of operation and maintenance Power Station reaches 6Gw, and the cost control ability is strong, which is expected to benefit from the market volume.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 427 million, RMB 860 million and RMB 1009 million respectively, with a year-on-year ratio of – 10.20%, + 101.39% and + 17.28% respectively, and the corresponding PE will be 53.79, 26.71 and 22.77 times respectively. It will be covered for the first time and given a “buy” rating.
Risk tips: policy promotion is not as expected, industry competition is intensified, photovoltaic power generation electricity price and subsidy change risk, subsidy collection lag, component price fluctuation risk, light abandonment and power restriction risk, development project is not as expected, EPC income fluctuation, overseas expansion is not as expected
