\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 985 China National Nuclear Power Co.Ltd(601985) )
Frequent policies have helped the development of nuclear power, highlighting its advantages under the energy transformation. Nuclear power is an important part of China’s energy supply system. Since 2007, China has issued a number of nuclear power industry policies. The national support policies for the nuclear power industry have changed from “appropriate development” to “actively promoting development” and then to “safe and stable development”. Under the energy transformation, nuclear power has four advantages: 1) the carbon emission per kilowatt hour of nuclear power is much lower than that of other power generation methods. 2) The unit power generation cost is low. 3) Nuclear power has high stability and priority scheduling, and the utilization hours are much higher than other power generation methods. 4) Nuclear power technology is mature with high safety performance.
Nuclear power approval was restarted, ushering in positive and orderly new development. After the Fukushima nuclear leak in 2011, China attached great importance to the safe development of nuclear power. Although it has experienced stagnation, the approval of nuclear power projects has returned to normal in the past three years. The 2021 government work report also clearly stated that “actively and orderly develop nuclear power on the premise of ensuring safety”, which fully reflects the determination to develop nuclear power. According to the objectives of China’s nuclear energy development report (2021), China is expected to approve 6-8 new nuclear power units every year during the 14th Five Year Plan period.
Fengguang holds dual core drive, with both volume and price rising, and the future can be expected. According to the objectives of the 14th five year plan of the company, the company plans to reach 56gw of installed capacity in 2025, including 26gw of nuclear power and 30GW of new energy, an increase of 15.3% and 238.2% respectively compared with that in 2021. In addition, under the background of power reform, the market-oriented proportion of the company is expected to increase. In the past, the market-oriented electricity price was reduced by 3-5 cents compared with the benchmark electricity price. Based on the company’s data in 2020, we calculated that the market-oriented electricity price of the company increased by 0.01 yuan, corresponding to an increase of 640 million yuan in the company’s revenue and 288 million yuan in the net profit attributable to the parent company. The increase in electricity price will increase the profits of the company. We expect that the company may usher in a simultaneous rise in volume and price in 2022, bringing greater performance flexibility.
Investment suggestion and Valuation: the company’s nuclear power + wind and solar dual core development has high growth in the future under the background of energy shortage and urgent transformation of energy structure. We expect that the company’s revenue from 2021 to 2023 will be 62.37 billion yuan, 74.77 billion yuan and 79.78 billion yuan respectively, with growth rates of 19.3%, 19.9% and 6.7% respectively. The net profit will be 8.04 billion yuan, 10.44 billion yuan and 11.16 billion yuan respectively, with growth rates of 34.1%, 29.8% and 6.9% respectively. The company will be valued at 15-20 times in 2022, with a reasonable share price of 8.31-11.07 yuan. It will be covered for the first time and given a buy investment rating.
Risk warning: the project progress is not as expected; The approval progress is less than expected; Downside risks of electricity price; The policy promotion was less than expected.
