\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 011 Huaneng Power International Inc(600011) )
Core view
Thermal power leaders that vigorously promote the transformation of new energy sources. At present, the installed capacity of the company is still dominated by coal-fired power generation, but the scale and structure of coal-fired units are reasonable. The grade below 300000 kW accounts for only 5.73%, and more than 54% are large units above Shanghai Pudong Development Bank Co.Ltd(600000) kW, with an industry-leading energy efficiency level. In 2021, the coal consumption for production power supply of the company’s coal-fired units was 290.7 g / kWh, and the standard coal consumption for power supply of power plants with 6000 kW and above in China was 302.5 g / kwh in the same period. In recent years, the company has made great efforts to promote the transformation of energy structure, and the proportion of wind power installed capacity has continued to increase. The abundant cash flow, competitive financing cost and strong resource acquisition ability brought by thermal power are the outstanding advantages of the company.
Thermal power: facing multiple inflection points. According to our calculation (based on the on grid power in 2021): a 10% increase in coal-fired electricity price will increase the net profit attributable to the parent company by 8.2 billion yuan; A 10% decrease in unit fuel cost will increase the net profit attributable to the parent company by 8.2 billion yuan. Driven by the continuous policy, the long-term dislocation of “market coal” and “planned electricity” is expected to be gradually corrected. At that time, thermal power will weaken periodically and return to the attribute of public utilities, which will create sufficient cash flow with stable roe return, and support the capital expenditure or considerable dividend scale of transformation and development. In the medium and long term, thermal power will gradually highlight its synergistic value with Fengguang new energy. The thermal power potential will gradually transition from electric power supply to flexible peak shaving power supply, and is expected to usher in a new cost recovery mechanism.
New energy: follow the trend and create a “second growth curve”. It is estimated that the company is expected to add 40 million kilowatts of new energy installed capacity during the 14th Five Year Plan period. By 2025, the company is expected to realize the installed capacity of 50.65 million KW, and the proportion of new energy installed capacity will increase from 9.4% in 2020 to 32%; An average of 8 million kilowatts of wind power installed capacity was added every year, and the compound growth rate of new energy installed capacity during the 14th Five Year Plan period was 37%. According to our calculation, the total net profit of new energy from 2022 to 2025 is expected to reach 7, 9, 11 and 13.2 billion yuan respectively.
Profit forecast and investment suggestions
We estimate that the company’s net profit attributable to the parent company in 22-24 years will be 9.2 billion yuan, 11.2 billion yuan and 12.9 billion yuan. Considering the profit distribution of perpetual bond holders, EPS (basic) will be 0.45, 0.58 and 0.68 yuan. Considering the leading position of the company in the industry, the annual growth rate of 37% of the installed capacity of Fengguang new energy during the 14th Five Year Plan period and the large performance elasticity during the reversal period of thermal power fundamentals, and referring to the average valuation of comparable companies, we give the company 18 times PE valuation in 2022, corresponding to the target price of 8.1 yuan. For the first time, give a “buy” rating.
Risk tips
The growth space of new energy power generation may be lower than expected; The fundamentals of thermal power may continue to deteriorate (such as higher than expected rise of coal price); The yield level of new energy operation may be reduced; Changes in assumptions will lead to deviations in the calculation results.
