\u3000\u3 Shengda Resources Co.Ltd(000603) 693 Jiangsu New Energy Development Co.Ltd(603693) )
Core view:
Event:
The company released its annual report for 2021, and achieved an operating revenue of 1.857 billion yuan, a year-on-year increase of 20.04%; The net profit attributable to the parent company was 307 million yuan (with non deduction of 299 million yuan), an increase of 99.59% year-on-year (with non deduction of 103.82%). The dividend plan is to distribute cash of 0.1 yuan per share (including tax), and increase 0.3 shares per share by converting capital reserve into share capital.
The first Haifeng project is connected to the grid with full capacity, and the 14th five year plan focuses on Haifeng and photovoltaic
With the full capacity grid connection of the company’s first offshore wind project, Rudong 350MW offshore wind power project, in December 2021, the company’s holding installed capacity reached 1.55gw at the end of the reporting period, including 1.35gw of wind power (0.35gw of offshore wind), 0.09gw of photovoltaic and 0.115gw of biomass. In addition, the company purchased 40% equity of Binhai offshore wind power Co., Ltd. and completed the delivery in November 2021. The corresponding target is mainly responsible for Jiangsu Binhai 300MW offshore wind power project. The company estimates that the annual investment income corresponding to 40% equity is about 100 million yuan.
Looking forward to 2022, the controlling shareholder of the company led the consortium to win the bid for Dafeng 850000 kW offshore wind power project, and the controlling shareholder promised to give priority to injection into the company when the subsequent conditions are met; In terms of photovoltaic, Jiangsu Lianyungang Port Co.Ltd(601008) Xinba 200MW agricultural photovoltaic complementary project, Shanxi Shuozhou Pinglu 70mW photovoltaic project, Taizhou Jiangyan, Jingjiang, Zhenjiang Runzhou roof distributed photovoltaic project and other multi-point promotion. We expect that after the shutdown of biomass business, the company will focus on the development of sea breeze and photovoltaic business, and the installed capacity is expected to grow at a high speed during the 14th Five Year Plan period.
The gross profit margin and roe increased by 9pct and 3PCT respectively, and the increase in the proportion of Haifeng and photovoltaic is expected to continue to push up the overall gross profit margin
In 2021, the company’s overall gross profit margin was 49.08%, an increase of 9.24 percentage points, mainly due to the increase in the proportion of wind power with high gross profit; During the period, the expense rate was 13.7%, with a year-on-year increase of 0.91 percentage points, mainly due to the increase of management expense rate and financial expense rate. The return on net assets was 6.37%, with a year-on-year increase of 3.04 percentage points. Overall profitability improved significantly. It is expected that in the next few years, the installed capacity of wind power and photovoltaic will continue to grow, the proportion of revenue will increase, and the overall gross profit margin of the company still has room to improve.
Jiangsu Province added more than 30GW of new energy in the 14th five year plan, and the company, as the leader of new energy operation in Jiangsu Province, will fully benefit
According to the notice on the construction of wind power and photovoltaic power generation projects in 2021 and other documents issued by Jiangsu Provincial Development and Reform Commission last year, Jiangsu will focus on the development of offshore wind power and photovoltaic power generation during the 14th Five Year Plan period, and strive to achieve a total installed capacity of wind power and photovoltaic power of more than 63gw in 2025. Based on this calculation, it is estimated that more than 30GW of wind power and photovoltaic installed capacity will be added in Jiangsu during the 14th Five Year Plan period. As the leader of new energy operation in Jiangsu Province and backed by the major shareholder Jiangsu Guoxin Corp.Ltd(002608) group, the company has significant advantages in project resources and development experience, and is expected to fully benefit from the high growth of new energy in Jiangsu Province during the 14th five year plan. In addition, the company also actively distributes markets outside the province, looks for suitable acquisition projects, and expands its business territory by endogenous extension.
The provision for impairment of biomass was 218 million yuan, so we got rid of the burden and went to battle light
In 2021, the company made a provision for impairment of 218 million yuan for biomass power generation, and there is no room for further large impairment after the provision. The impairment is due to the fact that the subsidy is no longer available after the utilization hours are used up, and the price of biomass fuel is higher, the acquisition is more difficult and the quality is declining. After the subsidy ends, the on grid electricity price is not enough to cover the fuel cost, and the continued operation is no longer of economic value. The company plans to shut down after the reasonable utilization hours are used up.
Valuation analysis and rating description
Considering that 40% equity of Rudong 350MW offshore wind power project and Binhai 300MW offshore wind power project will start to contribute income in 2022, and the provision for impairment of biomass project is basically completed, the growth rate of net profit attributable to parent company in 2022 is high. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 821 million yuan, 1.002 billion yuan and 1.251 billion yuan respectively, and the corresponding PE will be 15.77 times, 12.93 times and 10.36 times respectively. For the first coverage, give a “recommended” rating.
Risk tips:
The installed capacity of wind power PV is lower than expected; The recovery rate of renewable energy subsidies is lower than expected; On grid tariff reduction; Rising cost of new projects, etc.
