20211011-招银国际-龙源电力-00916.HK-Strong_momentum_to_drive_re-rating_in_4Q21E_4页_909kb
报告摘要
Summary of China Longyuan (916 HK) Company Update
Core Content and Key Information
This report provides an equity research update on China Longyuan Power (916 HK), highlighting its potential for re-rating in the fourth quarter of 2021 (4Q21E). The report emphasizes the positive catalysts from recent policy updates and market conditions, while also outlining financial performance and future growth expectations.
Main Points and Key Viewpoints
1. Positive Catalysts for Re-Rating
- Power Tariff Policy Update: The State Council's new power tariff market trading policy is expected to drive higher wind power tariffs. CLY's wind power sales mix is increasing, with direct market sales contributing significantly to revenue.
- Discounts on Coal-Power Tariffs: Previously, CLY's wind power sales were offered at a discount (20-30%) to coal-power tariffs. With tightening electricity supply, the company may see a narrowing of these discounts or even a premium.
- Earnings Improvement: The potential increase in wind power tariffs is expected to improve CLY's earnings performance.
- A-Share Listing Prospects: CLY has completed the first round of Q&A with the CSRC and is on track to return to the A-share market, with a potential timeline by the end of 2021.
2. Market Sentiment and Wind Output
- Power Supply Shortage: Recent power supply shortages in China have increased market focus on wind power output, especially during the high wind season in 4Q21E.
- Green Electricity Demand: The market is increasingly pricing in expectations for green electricity, with better returns and earnings performance expected for wind operators.
- Short-Term Cure for Power Shortage: The report suggests that surging wind power output in 4Q21E could help alleviate the current power supply issue.
3. Financial Performance and Outlook
- Revenue Growth: CLY's revenue is expected to grow from RMB 27,541 million in FY19A to RMB 39,577 million in FY23E, reflecting a steady increase.
- Net Income Growth: Net income is projected to rise from RMB 4,325 million in FY19A to RMB 7,848 million in FY23E.
- EPS Growth: EPS is expected to increase from RMB 0.54 in FY19A to RMB 0.98 in FY23E.
- P/E and P/B Trends: P/E is projected to decline from 25.6 in FY19A to 14.1 in FY23E, while P/B is expected to decrease from 2.31 to 1.61, indicating potential undervaluation.
- Capacity Expansion: CLY is expected to add 30GW of new capacity and at least 17GW through asset injection by end-2025, reflecting a capacity CAGR of ~25%.
4. Investment Recommendation
- BUY Rating: CMBIS maintains a BUY rating for CLY, with a Target Price of HK$19.0, unchanged from the previous TP.
- Price Performance: The stock has shown strong performance in the past 12 months, with a price increase of 196.7%.
- Current Price: HK$16.46, with a target price offering a potential upside of +15.3%.
Shareholding and Financial Structure
Shareholding Structure (H Shares)
- Wellington Mgmt Group: 13.0%
- BlackRock Inc.: 7.0%
- Free float: 80.0%
Financial Summary (YE 31 Dec)
- Revenue: Expected to increase from RMB 27,541 million in FY19A to RMB 39,577 million in FY23E.
- Net Profit: Projected to rise from RMB 4,325 million in FY19A to RMB 7,848 million in FY23E.
- EPS: Expected to grow from RMB 0.54 to RMB 0.98.
- Net Debt / Equity Ratio: Increases from 156.3% in FY19A to 199.3% in FY23E.
- ROE: Expected to rise from 9.0% to 11.4%.
- ROA: Projected to increase from 2.8% to 3.3%.
Key Financial Ratios
| Ratio | FY19A | FY20A | FY21E | FY22E | FY23E |
|---|---|---|---|---|---|
| Operating Margin | 36.1% | 35.1% | 38.2% | 38.7% | 39.9% |
| Pre-Tax Margin | 23.4% | 24.1% | 27.0% | 26.6% | 27.2% |
| Net Margin | 15.7% | 16.5% | 19.1% | 19.2% | 19.8% |
| ROE | 9.0% | 9.2% | 10.9% | 10.9% | 11.4% |
| ROA | 2.8% | 2.7% | 3.3% | 3.2% | 3.3% |
Market and Industry Context
- China Wind Sector: The wind sector is gaining importance due to tightening energy consumption controls and the role of renewable energy in GDP growth and capacity expansion.
- Green Electricity: The market is increasingly focused on green electricity, which could lead to better returns and earnings for wind operators.
- CMBIS Ratings: CLY is rated BUY, indicating a potential return of over 15% in the next 12 months.
Analyst Certification and Disclosures
- The analyst certifies that the views expressed accurately reflect personal opinions and that there are no conflicts of interest.
- The report is not an offer or solicitation to buy/sell any securities.
- CMBIS does not provide individually tailored investment advice and recommends consulting a professional financial advisor.
Conclusion
China Longyuan is well-positioned to benefit from the evolving power tariff policies and increased focus on renewable energy in China. With a growing wind power sales mix, potential A-share listing, and expected capacity expansion, the company is likely to see further re-rating. The financials show consistent growth in revenue and net income, supported by improving margins and strong EPS performance. CMBIS reiterates a BUY rating with an unchanged target price of HK$19.0, indicating confidence in the company's future prospects.
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